A hot topic was oil and its rapid descent from $125 a barrel. Harish Sundaresh, Loomis vice president, portfolio manager and commodity strategist, predicted that crude “can't stay at $50 a barrel. Just the sheer price drop should force up demand” and eventually the price as well.
While the rest of the world waits for word of a U.S./Iranian deal, Sundaresh expressed confidence that negotiations would have a happy ending. “Something positive is happening there,” he said.
In his blog, Sundaresh, who's responsible for commodity-related portfolios, wrote that unlike past oil production disruptions in Kuwait in the 1990s or Iraq in the 2000s, this time the Iraqi existing supply was not disturbed and the “geopolitics created a risk premium for oil prices. Iraqi production grew as the Kurds won more autonomy and exported freely, and Russia opted not to curb their oil exports.” Opec also opted not to curb exports, Libya raised its sweet crude production fourfold, and the U.S. demand dropped because of domestic shale production. All these things, together with the stronger U.S. dollar, have squeezed prices further, he wrote. Restrictions caused by storage shortages, however, eventually have to put the brakes on oil buying and thus price, Sundaresh told reporters.
“It is not if, but when.”