Monday 20 November 2017

Pimco calls end of oil price slump

David Stringer

The worst of the collapse in commodities prices is probably over, with oil poised to gain over the next 12 months, according to Pacific Investment Management. Just don't expect a major rebound.

Producers are shelving projects and scaling back output from Arctic oilfields to Indian aluminum mills amid the weakest returns from raw materials since 1999.

While the response may help draw a line under the rout, prices are set to remain "lower for longer" because of excess inventories, according to Pacific Investment (Pimco), which manages $15bn in commodity assets.

"The declines in commodity prices are largely behind us," according to Pimco's Greg Sharenow and Nic Johnson. Pimco has about $1.52 trillion under management. "Most prices are well into the marginal cost curve across metals and oil, and that will help to put a floor under prices here."

Oil may rise to a "baseline" of about $60 a barrel in one year's time as the impact of supply cuts becomes more evident from early 2016, according to Sharenow.

Sunday Indo Business

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