Published on Fri, Sep 26, 2008 at 08:51 | Source : Business Line
Updated at Fri, Sep 26, 2008 at 09:00
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No fear of commodity bubble: Barclays
The recent financial crisis in the US has hit sentiments in the commodity markets with open interest reducing drastically in the last few months, said Mr Paul Horsnell, Managing Director-Head (Commodities), Barclays Capital, the third largest commodity player after Goldman Sachs and Morgan Stanley.
The recent financial crisis in the US has hit sentiments in the commodity markets with open interest reducing drastically in the last few months, said Mr Paul Horsnell, Managing Director-Head (Commodities), Barclays Capital, the third largest commodity player after Goldman Sachs and Morgan Stanley.
Allaying fears of a commodity bubble, Mr Horsnell said the rise in commodity prices had been orderly and s not that steep to warrant a bubble.
A bubble can happen if, say, the commodity prices have risen by 500 per cent over a short period of time without any fundamental reasons. "Commodity prices have just corrected, not collapsed," he said.
Taking a call on crude oil, Mr Horsnell sees crude prices averaging at about $115 a barrel in 2009, while it should end 2008 at about $90 a barrel.
The volatility in crude prices should bring in more hedgers on the platform, but unfortunately, some of them have backed out. However, "there has been positive news flowing in of late and we have a positive outlook on crude in the long term".
