Oil Price is in 'Sweet Spot'

Oil prices have remained stable despite political unrest in the Middle East, and fund manager Nordea predicts this high-price, low-volatility environment to continue

Nordea 13 August, 2014 | 4:59PM

This article is part of Morningstar's "Perspectives" series, written by third-party contributors. Here, Ed Cowart, a manager of the Nordea 1 - North American All Cap Fund discusses some of the drivers of the oil market and explains why the current price for brent is optimal for both explorers and the general public.

Despite many important macroeconomic and geopolitical events, the past two years have seen oil prices remarkably stable at a fairly high level. With respect to Brent crude, now considered the industry’s global benchmark, prices have held between $100 and $115 per barrel over the past 24 months. Today’s price of $103 is not too far away from the price two years ago.

The US domestic benchmark, West Texas Intermediate (WTI), has been slightly more volatile – as the discount to Brent has expanded and contracted, based mainly on domestic infrastructure constraints. Despite this, the price of WTI also has been quite stable compared to the previous couple of years.

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About Author

Nordea  Nordea is a financial services group in the Nordic and Baltic region. Nordea offers online banking and insurance as well as information to investors. 

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