Oil price rally good for equities, says Coutts

Oil refineryA partial rally in the oil price, which is now about $65 for a barrel of Brent crude, will aid and not hinder developed market equities, an investment strategist says.

“The rally in oil could be characterised as a move from extremely low to ‘merely’ low prices,” says Alan Higgins, UK chief investment officer for Coutts.

“This should help inject some inflation into the major developed economies – where apart from Japan, it has been hovering at or below zero.”

Higgins says the oil price, which fell to less than $50 a barrel at the start of the year, was “unsustainably low over the medium term given continued improvement in the outlook for global growth”.

He says the recent rise, which has corrected slightly in the past few days, is consistent with increasing global demand. In addition, oil production seems to have slowed, which should support further price rises in coming months.

©2015 funds global mena

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