Oil Risk Premium Will End: Analyst
CNBC EMEA Head of News
Oil prices are heading back towards the $80 - $100 a barrel sweet spot which will boost oil stocks and take pressure off the global economy, according to Jens Zimmermann, a senior equity analyst at ABN AMRO Private Banking in Zurich.
Predicting that the Middle East turmoil will quieten down in the second half of the year, Zimmermann told CNBC on Tuesday that the "unrest premium" should be removed in the second half.
“ABN sees a $15-$20 per barrel risk premium in current oil prices, not so much related to actual physical disruption, but more to the potential that unrest could still affect Saudi output,” he said.
In the second quarter Brent will average $120 a barrel with WTI trading at $110 a barrel in Zimmerman’s view but then fall back in the second half to $105 and $95 dollars.
An “oil price correction into the $80-$100/bbl ‘sweet spot’ would be good news for energy stocks, as it would remove the current threat of possible ‘demand destruction’, which increased the volatility for energy stocks,” said Zimmermann.
As a result Zimmerman is telling investors to buy the following stocks: in oil services, Halliburton , Fugro and Sembcorp Marine; in Exploration, Apache , Whiting Petroleum and CNOOC.
And Zimmerman predicts ConocoPhillipsand Royal Dutch Shell will outperform.
Disclosure: Neither Jens Zimmermann nor his company own any of the stocks mentioned in this story.