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Be prepared for oil price bounce back: Hermes

Be prepared for oil price bounce back: Hermes

Investors should consider the fact that oil prices could increase more quickly than expected, Mark Sherlock, a Hermes Investment Management portfolio manager has said.

Mr Sherlock, the US SMID lead portfolio manager for Hermes Investment Management, suggested that sudden changes in the oil supply could quickly affect prices.

If this were true, investors may need to rebalance funds or change their asset allocation in order to benefit from the changes.

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Mr Sherlock said: “This is a supply-driven fall in the oil price rather than demand-driven.

“It is different (to other price falls) because of the advent of shale oil, which has a very steep decline curve. Supply can normalise quicker than people think.”

According to Bloomberg figures the price for Brent crude oil futures was US$56.17 per barrel on 9 February.

The price has seen steep falls in recent months, dipping below US$50 per barrel in January for the first time since 2009.

Adviser view

David Penny, managing director of Somerset-based Invest Southwest, said: “We simply use asset allocation modelling (for diversification of investments). It is a dangerous game as an IFA or wealth manager to say that you believe an asset class is going one way or another.”