What is Driving Big Moves in the Oil Market?

What is Driving Big Moves in the Oil Market?

Our Chief Fixed Income Strategist surveys the latest big swings in the oil market, which could lead to opportunities in equities and credit around the energy sector.


----- Transcript -----


Welcome to Thoughts on the Market. I am Vishy Tirupattur, Morgan Stanley's Chief Fixed Income Strategist. Along with my colleagues bringing you a variety of perspectives, I'll be talking about the implications of recent strong moves in oil markets.

It's Tuesday, April 9th at 3pm in New York.

A lot is going on in the commodity markets, particularly in the oil market. Oil prices have made a powerful move. What is driving these moves? And how should investors think about this in the context of adjacent markets in equities and credit?

Morgan Stanley's Global Commodity Strategist and Head of European Energy Research, Martijn Rats, raised crude oil price forecast for the third quarter to $94 per barrel. The rally in recent weeks is a result of positive fundamental news and rising geopolitical tensions.

On the fundamental side, we've had better than expected demand from China and steeper than forecast fall in US production. Further, oil prices have also found support from growing potential for supply uncertainty in the Middle East. Martijn thinks that the last few dollars of rally in oil prices should be interpreted as a premium for rising geopolitical risks. The revision to the third quarter forecast should therefore be seen to reflect these growing geopolitical risks.

Our US equity strategists, led by Mike Wilson, have recently upgraded the energy sector. The underlying rationale behind the upgrade is that the energy sector relative performance has really lagged crude oil prices; and unlike many other sectors within the US stock world, valuation in energy stocks is very compelling.

Furthermore, the relative earnings revisions in energy stocks are beginning to inflect higher and the sector is actually exhibiting best breadth of any sector across the US equity spectrum. Higher oil prices are also important for credit markets. To quote Brian Gibbons, Morgan Stanley's Head of Energy Credit Research, for credit bonds of oil focused players, flat production levels and strong commodity prices should support free cash flow generation, which in turn should go to both shareholder returns and debt reduction.

In summary, there is a lot going on in the energy markets. Oil prices have still some room to move higher in the short term. We find opportunities both in equity and credit markets to express our constructive view on oil prices.

Thanks for listening. If you enjoyed the show, please leave us a review on Apple Podcasts or wherever you listen to this podcast. And share Thoughts on the Market with a friend or colleague today.

Jaksot(1507)

Mike Wilson: Global Reflation: To Be or Not to Be?

Mike Wilson: Global Reflation: To Be or Not to Be?

On this episode, Chief Investment Officer Mike Wilson explains why global reflation may be back—and could be a powerful longer-term theme for portfolio allocations.

25 Marras 20194min

Andrew Sheets: Commodities Outlook 2020: Too Much of Everything?

Andrew Sheets: Commodities Outlook 2020: Too Much of Everything?

On this episode, Chief Cross-Asset Strategist Andrew Sheets says oversupply may spell headwinds for commodities in 2020 but there are exceptions.

22 Marras 20192min

Michael Zezas: The 2020 Election: 4 Sectors to Watch

Michael Zezas: The 2020 Election: 4 Sectors to Watch

On this episode, Head of Public Policy Michael Zezas says performance in four key sectors could be a bellwether for how investors view the outcome of next year’s elections.

20 Marras 20192min

Andrew Sheets: As Global Growth Improves, What to Watch

Andrew Sheets: As Global Growth Improves, What to Watch

On this episode, Chief Cross-Asset Strategist Andrew Sheets says global growth should pick up in 2020, but unevenly. The key for investors will be identifying the right opportunities.

18 Marras 20193min

Andrew Sheets: Will Markets See End-of-Year Holiday Cheer?

Andrew Sheets: Will Markets See End-of-Year Holiday Cheer?

On this episode, Chief Cross-Asset Strategist Andrew Sheets analyzes the historical phenomenon of the “end-of-year equities rally.” Will 2019 follow suit?

15 Marras 20192min

Michael Zezas: The Power of Unified Government

Michael Zezas: The Power of Unified Government

On this episode, Head of U.S. Public Policy Michael Zezas says a potential boost to the U.S. economy has less to do with political parties than it does a unified policy vision.

13 Marras 20192min

Mike Wilson: The Return of the Secular Bull Market?

Mike Wilson: The Return of the Secular Bull Market?

On this episode, Chief Investment Officer Mike Wilson shares three reasons why equities markets have rallied over the past few months… and where they could go from here.

11 Marras 20193min

Andrew Sheets: A Tough Road Ahead for the 60/40 Portfolio?

Andrew Sheets: A Tough Road Ahead for the 60/40 Portfolio?

On this episode, Chief-Cross Asset Strategist Andrew Sheets continues his discussion on the 10-year outlook for the U.S. and Europe—and identifies the challenges ahead.

8 Marras 20193min

Suosittua kategoriassa Liike-elämä ja talous

sijotuskasti
mimmit-sijoittaa
rss-rahapodi
psykopodiaa-podcast
rss-lahtijat
ostan-asuntoja-podcast
hyva-paha-johtaminen
rss-rahamania
leadcast
inderespodi
oppimisen-psykologia
lakicast
rss-uppoava-vn-laiva
rss-bisnesta-bebeja
rss-seuraava-potilas
kasvun-kipuja
rss-strategian-seurassa
rss-karon-grilli
rss-merja-mahkan-rahat
rss-inderes