No Scapegoats Here
Reporting that the rise in the price of oil is due to institutional investor holdings of commodity index-linked assets is just scapegoating, says Paul Horsnell, et al., in Barclays Capital Research’s report, Oil Sketches Monthly.
“We find no basis at all for that view, and show that, beyond some wildly incorrect numbers being placed into the public domain, the actual flow of net new investor money is very modest indeed,” he says.
Barclay reiterates that price highs for the year are not yet in, but says the shape of the energy price curve is currently incorrect.
“The back end has gone up too fast relative to the front. The front to back spread has moved far away from what we can justify on any fundamental flow basis. Indeed, the shape of the curve is now so far out of whack that in our view this looks like a good opportunity for producers to start to hedge at least some modest proportion of output well along the curve.”
Agree or disagree? Comments welcome!
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