Tom Clarke, portfolio manager on William Blair’s Dynamic Allocation Strategies team, sat down with “Bloomberg Markets: European Close” to discuss the implications of OPEC cutting production for the first time in eight years.
OPEC’s global significance is not as large as it was before and Clarke believes that despite the announcement, “impact on oil prices might not be that great.”
U.S. shale oil prices, currently in the $50-$65 range, will mostly likely fall over time due to new competitiveness, says Clarke.
He expects oil prices to remain in the $40-$60 range. Because of the abundance in supply, in part due to President-Elect Donald Trump’s plans for pipeline infrastructure, and the stagnation of demand, that price is likely to fall over time.
In the short term, among commodity-sensitive currencies Clarke said, “commodity exporters are the relative losers…and the obvious big winners are oil importers like the Indian rupee.” But the Russian ruble, Brazilian real, and Mexican peso are fundamentally attractive (cheap) currencies, so they provide potential opportunities from a long-term perspective
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