Stick with oil, it could be the “trade of the year,” according to Citigroup Inc.
The outlook for crude isn’t all bad, even as prices head for the worst start to a year since 1991 and there are dire warnings of the world drowning in supply. Forecasters from UBS Group AG to Societe Generale SA are predicting a rebound in the second half and Citigroup says the market just needs to weather a surge of exports from Iran after the removal of sanctions.
“There will be an initial wave of supply from Iran, but once that’s done, it will be flat and I think that’s when you start seeing opportunities for oil to turn,” Ivan Szpakowski, an analyst at Citigroup in Hong Kong, said Friday. “Part of the reason oil is the trade of the year is because it’s going to have such a broad affect, it’s going to take a lot of asset classes up with it.”