Tags: Waghorn | oil | years | economy

Fund Manager Waghorn: Oil Might Hit $150 in 6 Years

By    |   Tuesday, 17 Jun 2014 09:41 AM

As Iraq's military conflict sent crude oil prices to nine-month highs Monday, with August Brent futures hitting $113.58 a barrel on the Ice Futures Europe exchange, Jonathan Waghorn, manager of Guinness Global Energy Fund, sees strong gains ahead.

"It's a simple case of the world being able to cope with oil prices where they currently are, around $110 a barrel," Waghorn tells CNBC.

"We think of oil being a cost of the global economy. . . . As the world economy continues to grow, let's say 3 percent real growth to the end of the decade, we'd expect oil prices to inflate alongside."

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So how high will Brent rise? "Simple math takes you to $150 at the end of the decade," he argues.

He likes energy stocks too. "This is still an early trade for us in terms of this resurgence of the macro environment, and that being recognized in energy prices," Waghorn notes. "We think they are very, very cheap on price-earnings, on price to cash flow, on sum-of-the-parts basis."

Guinness Global Energy Fund's holdings include Total, Newfield, Canadian Natural and Devon Energy. The fund has been buying European names recently, he states.

While the fighting in Iraq has caused little damage to the country's oil fields so far, "the oil market is reacting positively to the unrest," Bill O'Grady, chief market strategist at Confluence Investment Management, tells Bloomberg.

"If Baghdad really starts to run into trouble, it's going to be very difficult to maintain production."

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As Iraq's military conflict sent crude oil prices to nine-month highs Monday, with August Brent futures closing at $112.94 a barrel on the Ice Futures Europe exchange, Jonathan Waghorn, manager of Guinness Global Energy Fund, sees strong gains ahead.
Waghorn, oil, years, economy
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2014-41-17
Tuesday, 17 Jun 2014 09:41 AM
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