From being a non entity in terms of commodity last year, it is one asset class that has come roaring back and has everything working for it, though ironically against for many other markets. Alastair Newton of Nomura International, Jonathan Barratt managing director of Commodity Broking Services and Rajini Panicker of MF Global Commodities discuss where might the crude go from here and how do you go about investing in crude.
Below is a verbatim transcript of the discussion. Also watch the accompanying video.
Q: Crude is so much about geopolitical issues, how do you define or describe the situation in the Middle-East North America (MENA) region right now. What kind of impact does it have on crude prices?
Newton: Since, we saw a turmoil move into Libya; it continues to pose a direct threat to oil outputs. The markets have priced-in for the complete loss of oil output from Libya, which is more or less where things stand today, offset to an extent by the additional million barrels a day which Saudi Arabia, Kuwait, Abu Dabi and Nigeria will be pumping between them, by about the end of first week of April.
Now having got to this point where we have seen oil being fairly static, within that range, there will be volatility still between those two prices. I would add that as far as we can tell, there is no additional clear and present danger to oil or gas output anywhere else in the MENA region.
Q: What would you line out as the important cues to which crude prices react and move to?
Barratt: Crude, generally, reacts to geopolitical concerns, particularly with what is happening in the Gulf at the moment. Also, it reacts to economic concerns particularly in US and also in China