Oil price to rebound by year-end, says SCBAM
The oil price war, coupled with lockdown measures to deal with Covid-19 around the world, will trigger volatility in the oil market for some time, especially in futures such as WTI and NYMEX crude oils, said Nunmanus Piamthipmanus, chief investment officer at Siam Commercial Bank Asset Management (SCBAM).
The price of oil futures would fluctuate heavily in the days before each month’s contracts come due, as demand was low since storage space had been taken up by purchases made during the oil price war.
In the medium to long term, the oil price would recover from its current level below $20 per barrel, she added.
When production is reduced this May as scheduled, the price would rebound to $30 to $40 per barrel by year-end, aided by easing of the Covid-19 crisis.
The chief investment officer commented that oil at the $20/barrel level was not worth investing in.
Although the “SCBOIL Feeder Fund” invests in WTI crude oil, the fund manager can rollover contracts of 12 months or less, she added. In effect, this means that the manager can invest in contracts with high returns, without waiting for the contract to come due.