Eric Nuttall: Oil Bull Thesis Intact, Don't Allow Price to Set Narrative
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"Crises, panic, fear — for an investor they should be wanted, because those offer you times to build positions at distressed pricing," Eric Nuttall of Ninepoint Partners said.
Oil prices dropped in the first half of March, spurring questions about the outlook for the sector.
Eric Nuttall, partner and senior portfolio manager at Ninepoint Partners, said his bullish stance hasn't changed.
"What I think we saw — it's a very common trade to be long oil as a hedge against inflation and short bonds. And once Silicon Valley Bank and then Credit Suisse (NYSE:CS), etc. (started having problems), you saw an unwind of that. So you saw people covering the bond shorts and liquidating oil," he told the Investing News Network.
Oil prices lost about US$10 in a week, equivalent to around 14 percent, but importantly demand wasn't affected.
"In my mind, that always creates opportunity," Nuttall explained during the interview. "Crises, panic, fear — for an investor they should be wanted, because those offer you times to build positions at distressed pricing."
In his view, going long on oil stocks is the most attractive investment opportunity today for those who are bullish on the commodity and see prices moving meaningfully higher — "Canada and heavy oil especially," he noted.
Back in December, Nuttall said oil prices could rise materially over US$100 per barrel in 2023, and he still sees that as a possibility, largely due to growing supply constraints. He expects inventories to be ground lower and lower to the point where supply won't be able to keep up — in that scenario, prices will have to rise high enough to kill demand.
"You need the oil price to go high enough where people can't afford to take their kids down to the Caribbean ... and that's where we're heading, I believe. So that's suggestive of an oil price of US$140 to US$180," said Nuttall.
"When we get there, I'm going to leave unanswered. But I just think we're in this multi-year period where oil grinds higher and higher and higher in the weeks, months, quarters and years ahead."
Watch the interview above for more from Nuttall on oil supply, demand and prices in 2023.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
