Brentwood Group sources suggest that OPEC’s recent cut in oil production will have an effect on the price of oil once the dollar rally ends. OPEC slashed production by 1.5 million barrels of oil per day in response to demand destruction taking place globally.
The Asian-based asset management firm is thought to be expecting the dollar’s remarkable rally to end within weeks as investors take stock of the inflationary implications of liquidity injections and bailouts that have become staple news for financial markets since the collapse of Lehman Brothers in September.
One of the Brentwood Group sources said that the liquidation of investments by banks, institutional investors and hedge funds had caused a massive repatriation of dollars to the US and these have been finding their way into US Treasury bonds, a perceived safe-haven.
Brentwood Group is reportedly expecting US GDP figures to show a contraction in the US economy which may trigger the beginning of the end of the dollar’s resurgence, a sell-off in treasuries and a flight-to-quality typically embodied by commodities.
Brentwood Group continues to maintain that the demand for oil as a price gauge will eventually give way to supply side concerns and, consequently, remain convinced of oil’s bull market credentials.
