Indications of recovery in the global cycle and in China’s housing sector also encouraged NNIP to begin increasing how much it holds in commodities, according to Koen Straetmans, senior strategist for multi-asset at the firm.
Straetmans said the oil markets look set to rebalance early next year. “The OPEC deal at the end of November was probably even more bullish than expected. On the positive side the cartel aims for the lower side of the intended production range at 32.5 mbd. This represents a -1.2 mbd production cut from October levels starting next year for six months. This period can be extended for another 6 months until the end of 2017.”
An agreement for non-OPEC countries to cut production by a further 600kbd, with Russia accounting for half of the total cut, will be made this weekend with a committee of OPEC and non-OPEC members put in place to monitor the implementation and compliance of the targets in each country.
“In the near term we therefore expect oil prices to be further supported, also as a sizable speculative short positioning may get closed. Thereafter compliant to the deal will predominantly determine further upside or not,” Straetman added.
In July NN IP also increased its exposure to EM, going from a neutral to medium overweight saying emerging market financial conditions had “eased substantially”.
