Mackenzie Minute: May 20, 2016
Benoit Gervais, Senior Vice President of Investment Management, Portfolio Manager and Lead of the Mackenzie Resource Team, explains how recent events may impact the supply and demand for oil, as well as the Mackenzie Global Resource Class.
We are now seeing the possibility that demand and supply maybe crossing over in the oil market a lot sooner than we had expected, perhaps weeks or months. So, sabotage in Nigeria, economic crisis in Venezuela, and now more recently, the wild fires in Alberta, are suggesting perhaps one or two million barrels a day may be offline for an indefinite period. So, we are seeing inventory has been drawn the second half, and price rising towards our target at $65 by the end of this year.
Over the next couple of weeks, we're looking for the DOE or the American institute that publishes inventory data in the U.S., to confirm that inventories are indeed coming down.
And then, secondly, we're looking for this OPEC meeting in Vienna on June 2nd. We're looking for members to confirm a stabilization of production.
Well, the fund has long had a strategy to focus on midcap energy names with a growth tilt to it. And, those same names have been suffering the most during this two-year bear market that we've had. And a return to higher oil prices means a number of things for those names.
One, higher margins obviously. Two, a better multiple because some of those balance sheets were stretched. And finally, a return to growth and with that comes a multiple.