For the first time in a long time, crude oil has hit US$60 a barrel.
But there needs to be cautious optimism because there are still concerns.
Auspice Capital CIO Tim Pickering said 2017 wasn’t a horrible year by any stretch, explaining it was a year of transition.
“We saw stability come back into the market,” he explained. “I wouldn’t say that anybody was shooting the lights out so to speak, but as we came out of the summer, we saw good momentum in crude oil and we predicted it would get to 60 bucks.”
When he looked at oil from a global perspective, he remained positive.
“U.S. inventories have really started to draw, or decrease, so the market is indeed rebalancing,” Pickering said. “The structure of the oil curve, the pricing curve in the future, is such that it disincentivizes storage and it really accelerates withdraws.”
Exports to China, the worlds largest importer of oil, are also strong, but export problems due to a lack of pipelines persist which has lead to a discount of about CAN$24 a barrel for Canadian crude.
However, Pickering believes even that has lead to some good investment opportunities.
“If you get a rally in global crude, it’ll bring Canadian crude up with it, we’re starting from a much lower price point, and so if we get a $10 rally in global crudes and Canadian crude moves up that $10, it’s a much better return given it’s at a lower price,” he said.
