Oil predicted to remain above $100
Oil prices have remained surprisingly strong in recent months despite the credit crunch, according to asset manager Threadneedle.
Oil prices have proved resilient to a number of factors in recent months, including the credit crunch, hedge funds unwinding and fears of an economic slowdown. Steve Thornber, global equity manager at Threadneedle, added: “Oil prices have been surprisingly strong. Having come through the winter with stronger prices, I see prices remaining high.”
Thornber explained that traditionally, the fourth quarter tends to be the weakest quarter for oil as summer demand has passed and demand for heating oil has not yet picked up. “Also, in light of the credit crunch and hedge fund unwinding, one would expect futures positions to be sold off again, thus causing oil price weakness. However, none of these factors have impacted upon oil prices. Rather, oil prices have strengthened,” Thornber added.
He predicted that oil prices would remain over $100 per barrel and could spike higher on fears of a disruption to supply. The price level would also be underpinned by ongoing demand from emerging markets, according to Thornber.