Play Video Saudi-US tensions are rising — Four experts debate what that means for energy prices and investors
Crude is getting crushed.
The rally in the commodity appears to be losing steam as WTI crude falls below $70 and hits its lowest level in a month.
Here's what four market experts have to say about the move:
• Helima Croft, global head of commodity strategy at RBC Capital, warns investors to keep a close eye on trade talk between the U.S. and Saudi Arabia. "The Saudis are already reaching probably the limits of what they can bring on in terms of easy oil, and so we're going to have to see what happens as we approach Iran sanctions," she cautioned. "We see WTI in the low- to mid-70s ending the year. We see Brent [in the] mid-80s. But again these are the type of political wild cards that could send oil much higher."
• Tim Seymour, CIO of Seymour Asset Management, says investors shouldn't count out the energy space looking into the fourth quarter. "I think you're seeing actually the year-over-year comps look fantastic for all these [energy] companies that are being run differently," Seymour explained. "I realize that energy prices have been feeding through some of these inflation reads you've been getting. But you strip them out like we did in retail sales … and you actually see that people are not giving any ground."
• John Kilduff, founding partner of Again Capital, warns that an imminent stand-off with oil producers in the Middle East could shoot crude prices higher. "You're going to hear stories about the Iranians smuggling [oil] out … and selling some of their oil effectively on the black market or having it turn up in Turkey and be, you know, washed," he explained. "We're going to grind higher. I'm not in the $100 camp but certainly $85-$90 for Brent."
• Larry Fink, CEO of Blackrock, says that a strong dollar could put additional pressure on the oil markets. "Having a strong dollar in front of having rising commodity prices is really destabilizing for the world, and so we need to have proper diplomacy with Saudi. Our hope is that energy prices drift back lower."
Bottom Line: Crude prices will likely grind higher in the near term. Investors should continue to monitor talks with Saudi Arabia and oil production numbers out of the Middle East.
