- Manager has been buying energy-company debt since February
- He predicts oil will rise to $55-$60 range by late next year
Scott Minerd, who manages $240 billion for Guggenheim Partners, is betting that oil prices are headed to $55 to $60 by late 2017 and then moving higher after global supply and demand reach a balance.
“We think the worst for energy is over,” Minerd said in a telephone interview Thursday. “The big destructive wave in commodity prices is over. We’re just cleaning up the mess after the tsunami at this point.”
Brent crude was trading at $47.91 a barrel at 5:32 p.m. in New York, up more than 70 percent from this year’s low on Jan. 20. Guggenheim has been buying energy company debt for the past three or four months, Minerd said, including from companies such as ConocoPhillips.
Other asset managers have offered a range of oil-price forecasts. David Rubenstein, co-chief executive officer of Carlyle Group, predicted Wednesday that the price may climb to about $70 within the next year and said distressed energy debt offers buying opportunities. DoubleLine Capital CEO Jeffrey Gundlach said Thursday that the price is unlikely to exceed $50 any time soon.
“I think that would be about it for the year,” Gundlach said during an investor webcast. “Even a brief visit at $60 won’t be enough to forestall the default cycle coming out of various brands of energy companies.”
There’s a chance oil prices could fall again before the end of this year, Minerd said in the interview, as production resumes in Canada once wildfires are under control. Longer-term, prices will recover as global demand continues to grow by about 1 million barrels a year while supply from high-cost U.S. fracking fields heads lower, he said.
“Oil could be substantially above $60 a barrel by 2018,” said Minerd, whose Guggenheim Total Return Bond Fund has beaten 98 percent of peers over the past three years. “We’re not in the era of low oil prices.”