Oil Facing “Epic” Volatility, How to Break Through the Noise

Eric Nuttall: Oil Facing “Epic” Volatility, How to Break Through the Noiseyoutu.be

With energy crisis headlines gathering steam, the oil market is facing “epic” volatility.

That’s according to Eric Nuttall, partner and senior portfolio manager at Ninepoint Partners. He told the Investing News Network that it’s more important than ever for investors to break through the noise in the sector.

“Inventories are my BS detector — they’re the nexus of supply and demand, and if inventories are falling it tells me that the market is undersupplied,” he said, adding, “That’s really what I focus on.”

Nuttall is optimistic about oil demand, even with recession concerns becoming more persistent, but he said that the real story is supply, which he views as coming from three main baskets: US shale, the Organization of the Petroleum Exporting Countries (OPEC) and “supermajors,” which are large global oil companies.

In a previous interview, Nuttall said the exhaustion of OPEC’s spare capacity would be an extremely bullish catalyst for oil, and he now believes that the group is approaching that point.

At the same time, he doesn’t see US shale supply increasing to its previous high levels, and he also doesn’t see the global supermajors rushing to boost output.

“And so we’re bullish on oil not really because of demand — even though we think demand will grow — but because US shale growth is capped at about 600,000 to 700,000 barrels per day,” Nuttall said.

“OPEC — we think they’re out of capacity, maybe they’ve got a million barrels per day. But if they’re not willing to bring it on unless there’s some massive geopolitical event, it’s kind of the same thing anyways,” he continued.

“And then the global supermajors can’t grow. So it’s this mismatch between supply growth and demand growth that makes us excited.” Watch the interview above for more from Nuttall on the outlook for oil.

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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.