Julius Baer: sobre el petróleo y la inflación que viene

Redacción - Viernes, 28 de Noviembre

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The week that was: Rude on crude

 

What started like a quiet week ahead of Thanksgiving turned out to become a showdown on energy markets. The lack of supply cuts agreed at the most recent OPEC meeting hit oil markets hard: -7% at some stage versus the previous week. Hence performance-wise, crude oil prices led the losers of the week followed by energy stocks and other commodity proxies. The counterbalance was the usual beneficiaries of lower input prices: Asian stocks in particular but real estate, benefiting from lower rate prospects in the light of a subdued energy bill. All in all, traded volumes were rather low – at least some ordinary pattern in a Thanksgiving week.

After seeing energy prices soften markedly, investors are turning to their favourite November ritual: Black Friday counting shoppers through the snow.

 

Christian Gattiker, Head of Research, Julius Baer

 

Commodities: Oil tumbles after OPEC meeting

 

OPEC’s decision not to cut supplies was no surprise but nevertheless caused a sharp sell-off on oil markets. Prices are roughly down 6.5% and West Texas Intermediate (WTI) fell below USD70 per barrel. The market will rebalance itself, but this comes with painful burden sharing among all participants. US shale production growth is set to slow and the risk of corporate victims of this process has increased. Oil supplying countries will also get their part of burden sharing through lower oil revenues, which not only in Venezuela’s case, could cause after-quakes on financial markets. Today’s pain should make the marginal shale, deepwater or oil sands suppliers fitter, driving further cost reductions, implying lower prices longer term. In the near-term, we still believe that sentiment is oversold and expect prices to eventually stabilise not least as demand shows signs of strength. Importantly, supply growth and not supply itself is at stake and thus we still believe that US energy infrastructure is an investment theme to hold onto. However, the key downside risk is the uncertainty how low prices have to drop until shale production growth slows.

OPEC’s no-cut sent oil prices tumbling. We expect prices to eventually stabilise as sentiment is oversold and demand shows signs of strength.

 

Norbert Ruecker; Head of Commodity Research, Julius Baer

 

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Eurozone inflation remains depressed

 

Yesterday, Germany and Spain published first estimates of November inflation and reported that inflation declined further - in Germany falling to 0.6% from 0.8% in October while Spain reported that consumer prices had been 0.5% lower than in November last year largely due to falling energy prices. The national data implies that November inflation in the eurozone, which will be released today, also declined from 0.4% to 0.3% (most likely). The depressed inflation in the eurozone increases the pressure on the ECB to do more to stimulate the economy. We expect the discussion about large-scale asset purchases including sovereign bonds to intensify today after the release of the inflation data. While inflation is still declining, forward-looking indicators such as yesterday’s published economic sentiment indicator are pointing towards a more constructive picture with a small uptick reflecting more positive production expectations and order books. Given the lagging nature of inflation data, more emphasis on the better activity data appears appropriate.

Eurozone inflation declines further due to lower energy prices and its lagging nature relative to the business cycle.

David Kohl, Head of Currency Research, Julius Baer

 

 

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