Oil: Medium-term positive impact of price recovery - Nomura
In the medium term, beyond any knee-jerk reaction to the OPEC meeting, a higher oil price should be a tailwind for the Norwegian and Canadian economies, according to analysts at Nomura.
“The latest oil investment survey by Statistics Norway shows a small recovery in oil investment in 2018, and also notes that “if the schedules for these plans are realised, the accumulated investment costs in 2018 from these projects will increase the investments significantly in field development, compared to the present estimate,” suggesting a risk of a further investment upgrade in 2018. This, alongside an improving inflation backdrop and soft landing in the housing market, should allow Norges Bank to be more optimistic into 2018, and we expect NOK outperformance.”
“We also judge that the market has shifted too much and is a now a bit too pessimistic about the prospects of further Bank of Canada hikes over the next year, particularly given the positive oil price developments, the closing output gap, still broad-based growth momentum and the pick-up in wage growth.”