Closely Watched Strategist At Nomura Securities Says Oil Is Going To $30-$35 Range; Gold Heading To $1400 Per Ounce?
Stocks, which opened in the green this morning, have turned negative after oil failed to hold onto a slight upward trend last week. West Texas Crude is down this morning, -2.20, or -4.52 percent to $46.23; while, Brent Crude is also lower, -.66, or -1.3 percent, to $48.21. Bob Janjuah, Co-Head of Cross Asset Allocation Strategy at Nomura, and, a closely-watched strategist — said on CNBC yesterday that “there was little chance of Saudi Arabia changing its decision not to cut oil production, despite the 60 percent fall in prices since June 2014; and, the cost of a barrel could even head lower.”
“Oil can go up in the short-term; but, I think there’s actually that there’s some political motivations at play here; and, Saudi Arabia is at risk of losing its position as the marginal price-setter — and I don’t think they want to lose that position. I think the Saudis will potentially carry on (with their policy of not cutting production) and production will remain high; but, my head target is $30-$35 — as where we’re [likely] to get to. Where prices are now, I think a $20 move is more difficult; but, I think that’s the risk out there,” he said on CNBC’s Europe Squawk Box.
Mr. Junjuah warned, “If you look at the U.S. economy, the bulk of capital expenditures and job growth has been in, and around the shale and energy-related sectors — so, if crude is down around the $30-$35 mark for a significant period of time, I think you’re going to see a default cycle in the U.S. energy sector.
Bottom line and consensus on the street is that the overall trend in oil is further price decline and a bottom somewhere in the $30s is where the smart money is betting oil ultimately ends up..
Meanwhile Gold Is Getting Its Mojo Back
Concerns over a weak global economic picture, the impending move by the European Central Bank (this coming Thursday) is driving the yellow metal higher and near a 4.5 month high. Gold is up $14.10 this morning or, +1.08 percent, at a near-term high of $1,290 per troy ounce. Sterne Agee’s Precious Metals Analyst Michael Dudas says he believes gold will head significantly higher this year and settle out somewhere the $1,400 mark. V/R, RCP