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Oil prices to hit $100 a barrel, and nine other predictions for 2016
Could the euro, Brazil and oil be next year’s unlikely winners?
Saxo Bank's "outrageous predictions" for 2016 include oil hitting $100 a barrel. Photo: Alamy
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By Tara Cunningham, Business Reporter
2:30PM GMT 16 Dec 2015
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The end of the oil sell-off is nigh. Aggressive moves by the Organisation of Petroleum Exporting Countries to limit the supply of oil could see the price of a barrel of crude oil spike to $100.
If the imminent flood of Iranian oil onto the market triggers a big response from Opec and non-Opec producers, then the oil price might enjoy a quick recovery, Saxo Bank has predicted.
A barrel of Brent crude traded consistently above $100 between 2011 and 2015, but much has changed since it tumbled from $115 in July last year to under $37 a barrel in recent days amid a global supply glut.
Pummelled by the fallout from the hostile Opec meeting just two weeks ago, when the cartel of oil producers decided not to cut oil production, oil prices slumped to seven-year lows.
But Saxo’s Ole Hansen believes his prediction on oil prices “may not be so outrageous after all”. Mr Hansen said the increase in exports from Iran would put the oil price under additional pressure, and could see it fall to $20 a barrel.
When oil touches this level, Saxo believes it will trigger a “big response” from oil producers, who will start cutting back production, prompting the market to rally.
However, geopolitical risks and supply disruption worries will see oil prices settle between the $50 and $70 a barrel mark before the end of the year.
Saxo Bank’s forecast is one of its so-called “outrageous predictions” for next year - a list of unlikely events that nonetheless pose a potential risk.
Steen Jakobsen, chief economist at Saxo Bank, said the 10 predictions, which include the Olympics turbo-charging a Brazilian recovery and a meltdown in corporate bonds, remain “an exercise in finding 10 relatively controversial and unrelated ideas which could turn your investment upside down”.
Although the outlandish “anti-herd thinking” aims to draw attention to unfathomable events, some have come true before.
While these predictions are by no means Saxo’s official forecast, Mr Jakobsen said many of this year’s risks “would not be particularly outrageous at all in more normal times”.
Against a backdrop of volatility and uncertainty, the spike in oil prices to $100 a barrel could also boost the Russian rouble, so much so it rises 20pc by the end of next year, the bank said.
Even the poster child for emerging markets weakness, Brazil, could be set for a stellar year, overcoming collapsing consumer confidence, skyrocketing unemployment and negative GDP to lead emerging markets out of their current malaise.
Mads Koefoed, of Saxo, reckons emerging markets equities could climb by as much as 25pc in 2016.
Ten “outrageous predictions” that might come true in 2016
Could the euro, Brazil and oil be next year’s unlikely winners?
Saxo Bank's "outrageous predictions" for 2016 include oil hitting $100 a barrel. Photo: Alamy[/COLOR]
Free home valuationYOPA's online estate agents can tell you how much your property is worth - and for freeSponsored by YOPA
By Tara Cunningham, Business Reporter
2:30PM GMT 16 Dec 2015
1 CommentThe end of the oil sell-off is nigh. Aggressive moves by the Organisation of Petroleum Exporting Countries to limit the supply of oil could see the price of a barrel of crude oil spike to $100.
If the imminent flood of Iranian oil onto the market triggers a big response from Opec and non-Opec producers, then the oil price might enjoy a quick recovery, Saxo Bank has predicted.
A barrel of Brent crude traded consistently above $100 between 2011 and 2015, but much has changed since it tumbled from $115 in July last year to under $37 a barrel in recent days amid a global supply glut.
Pummelled by the fallout from the hostile Opec meeting just two weeks ago, when the cartel of oil producers decided not to cut oil production, oil prices slumped to seven-year lows.
But Saxo’s Ole Hansen believes his prediction on oil prices “may not be so outrageous after all”. Mr Hansen said the increase in exports from Iran would put the oil price under additional pressure, and could see it fall to $20 a barrel.
When oil touches this level, Saxo believes it will trigger a “big response” from oil producers, who will start cutting back production, prompting the market to rally.
However, geopolitical risks and supply disruption worries will see oil prices settle between the $50 and $70 a barrel mark before the end of the year.
Saxo Bank’s forecast is one of its so-called “outrageous predictions” for next year - a list of unlikely events that nonetheless pose a potential risk.
Steen Jakobsen, chief economist at Saxo Bank, said the 10 predictions, which include the Olympics turbo-charging a Brazilian recovery and a meltdown in corporate bonds, remain “an exercise in finding 10 relatively controversial and unrelated ideas which could turn your investment upside down”.
Although the outlandish “anti-herd thinking” aims to draw attention to unfathomable events, some have come true before.
While these predictions are by no means Saxo’s official forecast, Mr Jakobsen said many of this year’s risks “would not be particularly outrageous at all in more normal times”.
Against a backdrop of volatility and uncertainty, the spike in oil prices to $100 a barrel could also boost the Russian rouble, so much so it rises 20pc by the end of next year, the bank said.
Even the poster child for emerging markets weakness, Brazil, could be set for a stellar year, overcoming collapsing consumer confidence, skyrocketing unemployment and negative GDP to lead emerging markets out of their current malaise.
Mads Koefoed, of Saxo, reckons emerging markets equities could climb by as much as 25pc in 2016.
Ten “outrageous predictions” that might come true in 2016
- The euro will hit $1.23
- Russia’s rouble to rise 20pc by the end of next year
- Silicon Valley’s unicorns brought back down to earth, as start-ups delay monetisation
- Olympics to turbo-charge emerging market’s Brazil-led recovery
- Democrats retain presidency, retake Congress in 2016 landslide
- Opec turmoil triggers brief return to $100 barrel oil
- Silver breaks golden shackles to rally 33pc
- Aggressive Fed sees meltdown in global corporate bonds
- El Niño sparks inflation surge
- Inequality has last laugh on luxury (ie. the luxury sector collapses)
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