Investment Strategy Insights: For Oil Prices, $40 Is the New $30 (May 2016)

We discuss our latest views on oil market dynamics in our monthly investment strategy report.

Commodities have seen a big bounce. The accepted narrative is that, as with other risk assets, this repricing is based on sentiment. But we think fundamentals also played a role. Late last year, global manufacturing faced recessionary conditions even though consumers were fine. Now, inventories have run off, with production converging back toward consumer take-away. Commodities are the nerve center; they bounced first. Yet China also contributed by pivoting back toward credit-fueled growth.

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