Oil price could reach $250 by next year, says AAA-rated manager

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by Danielle Levy on Jul 21, 2008 at 10:34

Oil price could reach $250 by next year, says AAA-rated manager

Citywire AAA-rated Nicolas Komilikis of Amiral Gestion believes it is incredibly unlikely that the oil price will go down and says $250 a barrel by next year is not beyond the realms of reason.

Contrary to the views of Dr Hendrik Leber of German boutique Acatis, who thinks there is a correction looming and that the oil price could fall to $50 in the next two years, and BlackRock CIO Bob Doll, Komilikis believes the oil price will remain high due to supply-side pressures and the strong depletion of oil reserves. 'We need to fill the decrease that is coming from depletion. This is why production hasn't increased since May 2005,' he says.

'Country by country it is difficult to see where the growth in production is going to come from,' he says.

Komilikis manages the Sextant Autour du Monde and Sextant PEA funds alongside Dominique Fière and AA-rated duo François Badelon and Julien Lepage, at Paris-based boutique Amiral Gestion. Alongside Badelon he also manages the Sextant Peak Oil fund, which was launched in January and aims to capitalise on the appreciation of oil, gas, coal, uranium and nuclear energy based on the premise that global oil demand will soon outstrip sustainable production capacity.

He highlights decreases in Norway and Mexico and is also wary that Russia, which he says has been one of the only growth areas among non-OPEC countries, may have reached its peak in terms of production.

The Paris-based manager also believes it is unlikely that Saudi Arabia will spend a huge amount of money to increase production which could cause the price to go down. 'Saudi Arabia is happy to earn money and is aware that they have to keep oil in the ground for the next generation,' he says.

The AAA-rated manager cannot envisage significant falls on the demand side, particularly as oil-exporting countries such as Russia and the OPEC countries, are experiencing growing domestic consumption.

'Unless China goes into a major recession, it is difficult to see how consumption could decrease at a worldwide level,' he says.

Over the three years to the end of June, Komilikis and his co-managers have posted a 33.4% return with the Sextant PEA fund compared to a 15.5% rise by the FTSE Europe TR index. Meanwhile over the 35 months two the end of June, the Sextant Autour du Monde fund has returned 50.1% compared to a 0.3% rise by the FTSE World TR index.

4 comments so far. Why not have your say?

Oil could hit $500 per barrel or more next year, and here is why:

According to energy investment banker Matthew Simmons, global oil production is now declining, from 85 million barrels per day to 60 million barrels per day by 2015. During the same time demand will increase 14%.

This is like a 45% drop in 7 years. No one can reverse this trend, nor can we conserve our way out of this catastrophe. Because the demand for oil is so high, it will always be higher than production; thus the depletion rate will continue until all recoverable oil is extracted.

Alternatives will not even begin to fill the gap. And most alternatives yield electric power, but we need liquid fuels for tractors/combines, 18 wheel trucks, trains, ships, and mining equipment.

We are facing the collapse of the highways that depend on diesel trucks for maintenance of bridges, cleaning culverts to avoid road washouts, snow plowing, roadbed and surface repair. When the highways fail, so will the power grid, as highways carry the parts, transformers, steel for pylons, and high tension cables, all from far away. With the highways out, there will be no food coming in from "outside," and without the power grid virtually nothing works, including home heating, pumping of gasoline and diesel, airports, communications, and automated systems.

This is documented in a free 48 page report that can be downloaded, website posted, distributed, and emailed: http://www.peakoilassociates.com/POAnalysis.html

I used to live in cold New Hampshire, USA, but moved to a safer place. Anyone interested in relocating to a nice, pretty, sustainable area, good climate with much rain and good soil?

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With the kind of oil prices some of these people hope for, the earth will stop moving, let alone transport or anything else !

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For the period 01/07/2005 to 30/06/2008, Sextant Autour du Minde returned 28.72%.

For the year to date it has lost 20.79%.

How they manage to lose oney on that scale when they are "around the world" investing is the usual story of fund manager greed and relative indifference.

Go for EFTs - a much better bet.

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Richard Hardy

Jul 22, 2008 at 16:03

Are these guys by any chance trying to entice us to part with our money by investing their funds?

We need more car manufacturers like Honda making the effort by developing and bringing to the market new forms hydrogen cars so that we become less reliant on petrol and diesel powered vehicles.

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