Yes, Oil Prices Are Back, but Maybe They Have Plateaued

Expanding stockpiles and surging shale pumping may put upper limit on petrol reprise.

Oil is mounting a comeback, with the US price swelling 36% this year. This spawns dreams of a return to over $100 per barrel once again. But haven’t we seen this movie before?

Oil, now at $63 per barrel, is benefiting from the generally upbeat investment sentiment, which has seen other commodities and stocks rise since December’s lows. Helping oil is an agreement among the nations in the Organization of the Petroleum Exporting Countries (OPEC), plus Russia, to curtail production, in a bid to levitate prices.

But numerous analysts, such as those at asset manager BlackRock, are skeptical that there’s much more room for oil to ascend. A recent BlackRock research note called the oil price “range-bound.”

For one thing, US data, largely due to shale, show climbing oil output. What’s more, stockpiles have risen for the past month. The OPEC curbs expire in June, and this famously fractious bunch may well not renew them. That means more oil on the market and downward pressure on prices.

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For a while now, oil prices globally have managed to shrug off the US shale boom. But the torrent of fresh shale oil seems relentless.

Commodities in general have surged back from a slump, although Goldman Sachs recently questioned the comeback’s staying power. Oil prices have bobbed up and down for year. Just when people expected one price level to prevail, it changed radically. Perhaps now’s the time to bob down.

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BlackRock Assets Surpass $6 Trillion

World’s largest asset manager got a big Q1 boost, thanks to fixed income, even though equities dimmed.

The world’s largest asset manager is now a titanic $6.5 trillion, thanks to a friendly first quarter.

BlackRock returned 9% for the quarter ended March 31, and was 3.1% higher than the year prior, generating total net inflows of $64.6 billion.

“Seinfeld” co-creator and “Curb Your Enthusiasm” star Larry David might say the organization did “pretty, pretty, pretty, pretty good.”

Most of the money came from the giant’s fixed-income strategies, a hefty $79.9 billion. Another $6.8 billion flowed in from alternatives, and cash management strategies provided another $5.6 billion. Advisory strategies kicked in another $1 million.

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The fudge on BlackRock’s sundae, however, was a little too hot. Equities lost $26 billion, and multi-asset strategies fell by $1.6 billion. That said, stock-based tactics are still up over the one- (63% fundamental, 27% systemic, and 97% indexed), three- (73%, 87%, and 99%), and five-year periods (83%, 87%, and 98%).

Larry Fink, the firm’s chairman and chief executive officer, said the “breadth of our investment capabilities” allowed the company’s strong returns and its ability to “continue to meet the evolving needs of our global clients.” He also pointed out that iShares was again its top global exchange-traded fund (ETF) industry flows, which helped a good $32 billion of that inflow from the fixed-income portfolio.

Fink also noted BlackRock’s first close of Long Term Private Capital, its new direct private equity vehicle. He also spoke of tech, specifically its 11% return from Aladdin technology investments. He also announced the firm’s deal to acquire software developer eFront, saying the two technologies will “set a new standard in investment and risk management technology.”

In other news, BlackRock has hired Xiaodong (Tony) Tang to run a new position which oversees its China business. The former GF Holdings CEO will split his time among Beijing, Shanghai, and Hong Kong. He will report to Geraldine Buckingham, BlackRock’s chair and head of Asia Pacific.

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