Billionaire and head of Orascom Investment Holding Naguib Sawiris predicted a rise in the price of black gold to $100, and also recommended investing in aviation. Several experts are sure that cryptocurrency can become a more successful investment
The cost of a barrel of oil will recover to $50-60, and in 18 months will rise to $100, said billionaire and CEO of Orascom Investment Holding Naguib Sawiris in an interview with CNBC. In his opinion, this will happen after the us oil companies leave the commodity market.
The American shale industry may die because of a "price war" with other countries, Saviris admitted. He is confident that the collapse of US oil companies can also lead to a drop in demand for fuel, which was caused by the coronavirus pandemic.
Sawiris added that he would invest in airlines while the crisis provides such an opportunity. The quarantine caused by Covid-19 also affected the air transportation sector. People stopped traveling, which led to a decline in airline revenue, and then the value of their shares. For example, the securities of the largest American representatives of the industry — Delta Airlines, American Airlines Group and United Airlines Holdings-have fallen by 64%, 68% and 72%, respectively, over the past four months.
Will oil price rise to $100 in a year and a half
Since the beginning of the year, the price of Brent oil has fallen by more than 50%. In January, one barrel of raw materials cost $68, now its quotes have fallen to $31, the minimum was reached on April 21 at $16. On the same day, the price of American WTI oil fell to -$40.
The last time Brent crude traded above $100 was in August 2014. But growth to these values will not occur for 18 months, as predicted by Sawiris, a leading analyst at 8848 Invest is sure. In his opinion, the increase in the cost of fuel will be gradual, as well as the recovery of the world economy.
"The recovery of oil prices to the level of $100 will take much longer than a year and a half. Growth in fuel demand will move in sync with the global economic recovery. The fact that many countries are beginning to lift restrictions caused by the coronavirus does not mean that the world economy will immediately enter a positive zone. The drop in global GDP predicted by the world Bank and the European Commission in 2020 indicates a long recovery period for major economies. At the same time, the real recovery in oil prices, as a result of the OPEC + agreements, will also not happen simultaneously: in the best case, Brent oil prices will close this year at $35 per barrel»
Antonov, an analyst at the IAC Alpari, agreed with the low probability of such a scenario. From his point of view, the price of a barrel of oil to rise above $100 in a year and a half, you need to recover as quickly as it was in 2007-2008. Then the cost of Brent raw materials reached a maximum of $147. However, in the current conditions, this is unrealistic, the expert stressed.
"If we go with the maximum speed according to the scenario of 2007-2008, then in 18 months the price will be $114. Theoretically, this is possible. If the price increases more slowly, it is unlikely to rise above $60, " Antonov predicted.
He added that within three months there may be a sharp increase in the price of Brent oil to $45. But this will not be the beginning of recovery, but only a correction after the price falls to $16, the expert noted. He explained that before entering parabolic growth, there should be a long-term consolidation of the asset.
Is it worth investing in aviation and oil companies now
Against the background of falling oil prices, the price of oil companies ' shares declined. For example, the securities of the oil and gas company LUKOIL fell by 25% in 4 months to 4920 rubles, falling to a minimum of 3754 rubles in mid-March. Shares of Russian oil and gas company Rossneft also fell in price. Over the same period, their price fell by 27%, to 340 rubles, at the moment falling to 234 rubles.
American companies operating in the oil and gas sector were even more affected. For example, the share price of Occidental Petroleum Corporation fell by 65% to $14 in 4 months. The value of securities of the oil and gas exploration firm Murphy Oil Corporation fell by 55% to $10.7 over the same period.
But even despite this decline in price, now is not the right time to buy shares of oil companies, Pershikov believes. At the moment, the main driver of growth in the value of securities is the news about the partial withdrawal of the EU from the pandemic and the gradual lifting of restrictions in the US. However, the real picture of problems in the economy is still unknown, and it will become visible only in the middle of the year, after the publication of quarterly and semi-annual macroeconomic indicators. Until then, any fresh data on industrial production, consumer activity or business confidence could have a strong impact on exchange-traded assets, the analyst warned.
It may be too early to invest in airlines. It will be possible to buy shares of such companies only when all restrictions imposed during the pandemic are lifted and flights resume. Then you will need to analyze the financial condition of these companies, the expert said. There is a risk that they will take a long time to pay off their debts, which will make such investments less attractive.At the same time, airline securities can be considered for speculative transactions. The price of the Boeing stock fell by 79% to $89. Even if it recovers by 38%, to $226, the growth will be 154%.
And yet cryptocurrency?
The crisis caused by the coronavirus pandemic also affected the cryptocurrency market. The price of bitcoin in March fell to $3800, within a day falling by more than 50%. However, since that time, the exchange rate of the coin has fully recovered and now stands at $9300.
Pershikov believes that investing in the first cryptocurrency can bring more profit than buying shares in oil companies. However, it is too early to buy BTC now. The analyst warned that the exchange rate of the coin could fall to $7000 in the first months after halving. This will happen due to the restructuring of the mining industry and the historical price behavior of PoW currencies after halving.
If bitcoin falls in price to these values, it can be bought with the expectation of one and a half to two years, Pershikov believes. He expects that the price of the coin may rise at least twice over this period. A rapid recovery of the stock market is unlikely, now shares are becoming more expensive, rather on emotions than on a real economic Foundation, the analyst said.
Antonov expressed a similar opinion. He also called buying bitcoin a good investment. However, cryptocurrency is a risky asset, so only available funds should be invested in it, the expert advised. He also added that we should not expect the BTC rate to rise to $100,000 against the background of increased inflation of national currencies. This looks like a marketing move to attract new investors to the market, the analyst shared his opinion.
"If there are available funds that can be invested in risky assets, then bitcoin is a good asset for this purpose. In my opinion, the topic of inflation does not work for bitcoin. This is more of a marketing ploy to attract new investors to the market. Another horror story: everything will become worthless, and bitcoin will rise in price to $100 thousand. There will be rules of the game, then the demand for it will increase. In the meantime, it remains a speculative instrument. I took my 50-100% and ran away, " Antonov said.
Right now, bitcoin may look like a more attractive investment
Experts agreed that an increase in the price of oil above $100 for a year and a half is unlikely, this will not allow the current macroeconomic situation and low demand for fuel. In this regard, it is probably too early to buy shares of oil companies — there are no direct prerequisites for the recovery of their quotes.
Airlines are in a similar position. Their shares can be bought for short-term, speculative purposes. However, before investing in this sector for a long time, you should wait for the removal of restrictions on flights and assess the financial situation of companies for large debts.
Cryptocurrency, on the other hand, is currently winning shares as an investment. You can invest in bitcoin for one and a half to two years. But first, it is safer to wait for the correction of the coin price to $7000. It should also be remembered that this is a risky asset, the acquisition of which can result in a complete loss of capital. In addition, it is not necessary to wait for the growth of the cost of BTC to $100,000, many analysts call this an unlikely prospect. If the asset will grow, it is worth fixing the profit at the level of 50-100%. Forecasts of a multiple increase in the price of bitcoin can only be a marketing move to attract new players.
