Following this morning's record high in the cost of oil, at above $135 per barrel, BlackRock's Robin Batchelor says prices are likely to remain high for some time yet, triggering a strong re-rating of energy shares.
Batchelor, manager of the BTF World Energy fund, believes that re-ratings are inevitable as analysts increase their oil price assumptions and consequently their earnings expectations. "The energy sector currently trades at a discount to the broader market, and we believe that the story of sustained high oil prices has not yet been factored in to equity valuations," he said. "The valuations that analysts are using are far lower than that which the oil futures curve would suggest. Analysts continue to factor a long term oil price of between $70 - $80 into their valuations, whereas the o...
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