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Fund Manager Franklin Templeton Bets On Higher Oil Prices

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Fund Manager Franklin Templeton Bets On Higher Oil Prices

Franklin Templeton Investments, which has $740 billion in assets under management, has been making some big bets that the oil rally is far from over. WTI prices, which dipped near $26/bbl in February, have recovered to around $50/bbl in recent weeks. However, Franklin Templeton believes that prices are not yet high enough to balance the oil market.

“Can we get enough supply at $50 a barrel? My guess is not,” Franklin analyst Frederick Fromm said.

“Longer term, we need at least $65 a barrel.”

Related Link: Goldman Sachs Reviews U.S. Rig Count And Updates Production Forecasts

With global oil demand continuing to rise, the firm believes $50/bbl is not a high enough price for producers to meet global demand.

Franklin Templeton is predicting higher oil prices will benefit U.S. shale producers who were hit hard during the downturn, including Anadarko Petroleum Corporation (NYSE: APC), Occidental Petroleum Corporation (NYSE: OXY) and Apache Corporation (NYSE: APA).

The firm has been selling shares of integrated oil giants BP plc (ADR) (NYSE: BP) and Exxon Mobil Corporation (NYSE: XOM) and buying shares of E&P stocks.

The firm’s commodities funds now have a record 41 percent of assets invested in E&P companies.

Fromm says that oil prices will eventually settle into a long-term range between $65/bbl and $85/bbl.

Disclosure: The author holds no position in the stocks mentioned.

Latest Ratings for APC

DateFirmActionFromTo
May 2019DowngradesBuyNeutral
May 2019DowngradesOutperformMarket Perform
May 2019MaintainsEqual-Weight

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