[情報] What next for oil prices?

看板CFP (理財規劃)作者rondeau (IFA)時間18年前 (2008/06/10 12:11)推噓0(0推 0噓 1→)

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拋磚引玉.... What next for oil prices? Questions for Fred Fromm, CFA, portfolio manager, FTIF Franklin Natural Resources Fund (a subfund of Franklin Templeton Investment Funds, a Luxembourg-registered SICAV) Summary ‧ Current prices will eventually impact the growth in demand for oil, but estimating the future balance between supply and demand for oil is problematic. ‧ The shares of oil producers have not kept pace with the rise in oil, so downside potential for these stocks may be limited. ‧ New studies into world oil supplies may result in higher oil prices if the results are worse than expected. ‧ The world may not be running out of oil, but extracting oil has become more expensive, a consideration that may support high prices. ‧ While the impact of so-called ‘speculators’ on oil prices is difficult to pinpoint, many are likely basing their decisions on underlying commodity fundamentals. ‧ We are only beginning to see the impact of soaring oil prices on the real economy. ---------------------------- How much further can the rise in oil prices go? ---------------------------- Unfortunately, it is very difficult to predict oil prices, and a large amount of guesswork is always involved. Production and consumption are very diffuse and often opaque, making estimations difficult. Although everyone acknowledges that OECD demand is softening, most oil bulls believe that non-OECD demand—in particular in China, India, the Middle East and Latin America—will remain fairly resilient. The argument that oil prices will remain elevated is therefore largely dependent on these demand factors—OECD stagnating, but not falling precipitously, and non-OECD demand remaining resilient. The other piece of the bull argument has to do with supply availability, which is impacted by new projects and decline rates in existing fields. Although projects have faced delays, we have a fairly good picture on planned capacity additions and, therefore, new supply. However, the behavior of existing fields is very uncertain given that most of what’s happening occurs deep in the earth’s crust, and given that there has been a lack of information from many of the world’s major producers, such as Saudi Aramco. The aggregate decline rate, which is natural and impacts all wells eventually, can have a large impact on production capacity. On matters of both supply and demand, my opinion for some time has been that non-OECD demand would be stronger than expected and that the decline rate of existing fields would be higher than expected. This appears to be the case. However, demand growth appears to be slowing more than expected in OECD countries. In addition, we are beginning to see signs that the fuel subsidies in many non-OECD countries that have kept demand artificially high will be reduced. Such moves should also lower demand growth. FOR BROKER/DEALER USE ONLY. NOT FOR PUBLIC DISTRIBUTION. Now that I’ve provided some background, I’ll get to the question directly. Predictions of higher oil prices are inevitably made with incomplete information, and investors should treat them as “best guesses.” That said, as long as demand outstrips available supply, theoretically, there is no limit as to how high the price of crude oil can go. However, at some point prices will squeeze out demand, and that should be a limiting factor on price. That level is difficult to determine, and demand destruction does not happen overnight, but I believe current price levels will eventually impact global demand growth. With that assumption, we can now focus on supply. Many new projects are coming on line that should increase available supply, but these will be partially offset by difficult-to-predict declines in existing production. The difficulty in estimating net new capacity makes estimating the supply and demand balance (and therefore price) somewhat problematic. It is my belief that we will move into a more balanced state over the next one or two years that should result in at least a flattening of oil prices, and possibly a decline. So does that mean we should sell energy stocks? Not necessarily. Oil equities appear to be discounting oil prices of around US$80 per barrel (bbl), far below today’s price of over US$130/bbl. Put another way, the shares of oil producers have not kept pace with the rise in oil and should, therefore, have less downside potential than one would expect. In addition, if investors become convinced that oil prices will remain above US$100/bbl, we could see significant appreciation in many oil and natural gas-related equities. The upside/downside scenario for energy stocks therefore remains attractive, in my opinion. ---------------------------------------- What do you make of the assessment by the International Energy Agency (IEA) that it may have overestimated the capacity of oil-producing countries to keep up with growing demand, and that it has become harder to keep supply and demand in equilibrium? ---------------------------------------- In my opinion, there is very little question that the IEA has done a poor job of estimating both supply and demand. When demand was strengthening in the early part of this decade, the IEA continually underestimated demand growth, and over the past couple years has been way off on supply. For instance, until recently, the IEA was estimating that Russian oil production would continue to grow at a fairly healthy clip, despite many indications that it might actually decline, which is what has happened. Given that Russian production growth had been an important supplement to world supplies for many years, this was a critical mistake. It now appears that the IEA is undertaking a more comprehensive study of world supply, which will, hopefully, provide better insight into actual production capacity. The problem is that the results of a more comprehensive study are not likely to be pretty and could result in higher prices if the conclusion is worse than expected. Do you believe we have indeed hit “peak oil”? I’m not a big fan of the notion of peak oil, primarily because there is still a lot of oil in the world. It just costs more to either get it out of the ground or to process it, as in the case of oil sands or heavy oil. For instance, recovery rates (the amount of oil than can be produced as a percent of oil in place), are only approximately 30%-40% globally. An increase in recovery rates of just 5% could have a large impact on available supply. This is why, as a theme, we at FTIF Franklin Natural Resources Fund* invest in oilfield service companies that provide equipment and services to aid in increasing recovery rates. Although Canadian oil sands are an important source of new production, particularly for the U.S., those developments currently produce only about 1 million barrels per day, or just over 1% of world demand, and that is expected to grow to only about 3 million barrels over the next three to five years—still important, but not enough to have a huge impact. Similarly, the discovery of the Tupi deep-water oilfield and other recently announced discoveries in Brazil will be important additions to supply, but not for at least three to five years, which is the typical development time for deepwater discoveries. And even then, the highest current estimates are for production of 2 million barrels per day. Most agree that the global decline rate is approximately 5% per year. This equates to 4.3 million barrels per day in necessary supply growth just to offset natural declines. But some think the global decline rate could be as high as 8%-10% or almost 8 million barrels of production per day at the midpoint.To summarize, we are not running out of oil—yet. However, it is getting much more expensive and difficult to find and develop. Such considerations are likely to support prices at a historically high level, for the benefit of producers with long-lived, low-cost production, such as FTIF Franklin Natural Resources Fund’s largest holding, Occidental Petroleum. OXY, as it’s also known, produces most of its oil in California and Texas using enhanced oil-recovery methods. Production growth is slow, but steady. But most importantly, the investment required by OXY to maintain production is low, leaving more cash for growth projects in the Middle East and Latin America. ------------------------------ Do you think it’s possible to imagine a sudden fall in demand, not just in the U.S., but elsewhere? ------------------------------ Declines in demand are rarely “sudden” given price inelasticity (in other terms, the lack of reaction in demand to changes in price). However, demand is already softening in OECD countries and has been softening for a couple years. Although non-OECD demand has been fairly resilient, it too is likely to soften , particularly in a global recession. However, I am a strong believer in the long-term growth of per capita consumption around the world, which will eventually lead to an overall increase in demand. In other words, I expect any dislocation in the supply and demand fundamentals to be short term in nature. If this is the case, any significant decline in commodity prices and equity valuations should be treated as a buying opportunity. To clarify, “short term” could be as long as one to three years. -------------------------------- Do you believe the Fed’s rate-lowering campaign and the U.S. dollar’s slide have contributed to the spike in prices? -------------------------------- It’s difficult to separate out the various impacts of a weak dollar. Although a weak dollar clearly cushions the impact of higher oil prices on non-dollar economies while leading to a higher price requirement for oil-exporting countries (in other terms, they need a higher price to compensate for the weak dollar impact on non-dollar import prices), it’s difficult for me to imagine that demand in* A subfund of Franklin Templeton Investment Funds, a Luxembourg-registered SICAV.non-dollar economies increases as a result of a weak dollar, which would have to happen to increase global demand. However, it appears some investors are using oil as a dollar/inflation hedge, similar to gold. If such a tendency becomes ingrained in an investment discipline, it could lead to a higher price of oil, or help lower prices if the dollar’s decline reverses. It is interesting to note that the most recent rise in oil began as the dollar was strengthening—quite the opposite of what one might have expected. ----------------------------- The value of investment funds tracking oil and other raw materials has grown from US$13 billion to US$260 billion in the past five years. OTC commodity derivatives have also increased exponentially. So, to what extent are “index speculators” to blame for the hike in oil prices? ----------------------------- Again, the impact is very difficult to pinpoint, but I think it is naïve to say that there has been no impact at all. Pension funds hold an enormous amount of assets, and a decision to move even a small portion of these funds into commodities could have a big impact. However, many of these investment funds’ decisions are long term in nature, and one could argue that these funds should always have had a large part of their portfolios in commodities. So, although funds may be having an impact, I don’t think we’re going to see the situation reversing anytime soon. We have this discussion internally all the time. Are speculators driving up the price of oil? How do you differentiate a speculator from a smart investor? These “speculators” or “investors” are likely considering the underlying commodity fundamentals when making their bets. What is your assessment of the impact of soaring oil prices on the real economy? Some suggest it may take a couple of years for the really big impact to be felt by world economies. Although the impact of high oil prices on the real economy is typically slow, I believe we are seeing the beginning of it. However, the underlying trends of per capita consumption in emerging economies are so strong that I’m not sure what’s happening in the OECD countries will matter. In the 1970s and 1980s, it took two or three years after the Iranian Revolution-induced price spike for demand in OECD countries to react. But consumption was much less efficient then, so it will likely take longer this time around, and consumption weakness is likely to be less severe. The costs of oil exploration and production (E&P) companies have doubled in the past three years. What is your assessment of their prospects? Rising costs for oil and gas producers are always a concern, which is why we at FTIF Franklin Natural Resources Fund seek out low-cost producers with long-lived assets and, preferably, the ability to lower costs by applying new development and production technologies. Many of our E&P stocks, which are mostly U.S. companies, are growing production by 30%-50% on an annual basis while lowering per unit costs. These have been some of our largest holdings and best-performing investments. Southwestern Energy is a good example. We have been cautious on oil refiners and integrated oil stocks that also have refining operations. This is why we reduced exposure to the integrated oil sector and added to our E&P investments in the latter part of 2007. As demand softens, it becomes more difficult for refiners to pass-through higher feedstock costs. However, the share prices of refiners have declined significantly and appear more attractive as a result, although the outlook still remains challenging. Integrated oil stocks, although performing better of late, have still underperformed other energy-related sectors represented in the fund and, therefore, appear more attractive on a relative basis. Furthermore, a decline in the price of oil could be of benefit to refiners and the refining operations of integrated oil companies. Of course, integrated oil stocks would also receive a lower price for the oil they produce in that scenario, so there are some offsetting factors. In conclusion, the recent explosion in commodity prices has led us at FTIF Franklin Natural Resources Fund to cast our net wider in our search for investment opportunities. For the same motive, it is reasonable to expect an actively managed fund such as FTIF Franklin Natural Resources Fund to look to take profits in sectors/stocks that have performed well and whose valuations appear to reflect the company’s prospects. -- ※ 發信站: 批踢踢實業坊(ptt.cc) ◆ From: 122.123.138.190