March 2020
Uncommon truths: Is oil cheap at $20?
Paul Jackson. Global Head of Asset Allocation Research and András Vig. Multi-Asset Strategist
We have argued for some time that oil will eventually fall to $20. It is easy to come up with reasons why it could go much lower but history suggests it is not far from bottoming (see chart).
We recently boosted the weighting of energy commodities in our Model Asset Allocation. Also, if we are right about the oil price being close to a bottom, we will need to revisit our allocation to the energy sector (we are currently Neutral in our Model Sector Allocation).
All data as of 27 March 2020 unless stated otherwise.