Oil’s ready for 50% bounce

Oil’s ready for 50% bounce

Oil’s ready for 50% bounce By Jessica Ng, Bloomberg
 
Now’s the time to buy oil as OPEC members suffering swollen fiscal deficits will be prompted to curb output, according to Societe Generale SA, which predicts a price rebound next year.
 
Brent crude will climb to $60 a barrel at the end of 2016 as production cuts by the Organization of Petroleum Exporting Countries will help balance supply and demand, the bank’s head of global asset allocation Alain Bokobza said on Monday. The bank recommends increasing exposure to oil-related assets with a view that commodity prices are bottoming out.
 
OPEC last week effectively abandoned the idea of limiting production to control prices as Saudi Arabia, its dominant member and de facto leader, stuck to its one-year-old policy of pumping until rivals are squeezed out of the market. The organization will keep producing about 31.5 million barrels a day, the group’s President Emmanuel Ibe Kachikwu said Friday after a meeting of ministers in Vienna.
 
“Saudi Arabia must gather OPEC members to stop producing that much -- all the Gulf countries are just bleeding,” Bokobza told reporters in Singapore. “We’ll wake up one morning and OPEC members will say we’ll cut production. How much is the price rise on that announcement you think -- $5, $10? We’re super bullish on the oil price.”
 
Crude has tumbled about 40 percent since OPEC’s decision in November last year to sustain output amid a global glut, with global benchmark Brent headed for a third annual decline. Prices fell to a six-year intraday low of $42.23 on Aug. 24 and were at $42.75 a barrel at 2:28 p.m. in Singapore.