Global oil prices surge more than 10% at the open of Asia's trading on Monday after a drone strike on a Saudi Arabian oil facility affected about 5% of global supplies. Geopolitical events tend to see exaggerated initial impact in markets. With this, Citi analysts call for investors to see through any near-term market dislocations and remain carefully balanced in their asset allocation.
Commodities: Bullish Gold Outlook; Oil Enters a New Era
By Jessica Tan
Citi’s Global Investment Committee has increased allocation to gold as a portfolio risk hedge. Meanwhile, the US looks well on its way to becoming a net oil exporter.
Commodity markets have generally gone quiet in 3Q however, Citi analysts see the awakening of the “summer slumber” depending largely on expected continued central bank easing and politics.
Citi analysts believe that oil can outperform other commodities even if trade tensions were to escalate. This is because supply-side factors can be far more influential than demand changes.
