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How to play the oil price swings

Paris, France,

Oil price: We confirm our target price for the next 12 months in the range of $60-70 per barrel. Geopolitical risks have pushed the price up above 70$ per barrel in the past weeks.Inflation:

The recent increase in oil price is expected to have very limited impact on core inflation as the rise in oil price is perceived as temporary.

Growth: On growth impact, there are winners and losers.

Investments: In this maturing phase of the cycle, which remains mildly favorable for risk-assets but with limited directional conviction, the resilience of the oil price may open opportunities for relative value exposures i.e. a preference for the energy sector in the equity space and in US HY, unless there are significant deviations from the current OPEC policy which would require a reassessment of the investment case.

The overshooting phase of oil price above 70 USD per barrel driven by geopolitical risks has been suspended by speculations of a potential policy shift by Saudi Arabia and Russia. The two countries announced – in a move not coordinated with OPEC partners- a possible increase of their output. The issue will be probably discussed in the next OPEC meeting in June, so far we confirm our target price for the next 12 months in the range $60-70 per barrel.

OPEC has mainly been responsible for recent swings in supply. OPEC increased production to discourage US shale oil producers during the period when the economic environment was fragile. We would note, however, that the cartel cut production during the 2017 global economic recovery, with April of that year showing the lowest production level in three years.

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Amundi, the leading European asset manager, ranking among the top 10 global players[1], offers its 100 million clients - retail, institutional and corporate - a complete range of savings and investment solutions in active and passive management, in traditional or real assets.

With its six international investment hubs[2], financial and extra-financial research capabilities and long-standing commitment to responsible investment, Amundi is a key player in the asset management landscape.

Amundi clients benefit from the expertise and advice of 4,800 employees in more than 35 countries. A subsidiary of the Crédit Agricole group and listed on the stock exchange, Amundi currently manages nearly €1.8 trillion of assets[3].

 

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Footnotes

 

  1. ^ [1] Source: IPE “Top 500 Asset Managers” published in June 2021, based on assets under management as at 31/12/2020
  2. ^ [2] Boston, Dublin, London, Milan, Paris and Tokyo
  3. ^ [3] Amundi data as of 30/06/2021

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