The unemployment numbers are scary, but not as scary as expected, sending the Dow rocketing up 100 points, with oil hot on its heels breaking above $70.
Will oil hold on for the rest of the day? Investors are obviously buying into the green shoots theory. And every time they turn around there’s a new report saying that oil will cost more in December than it does today.
Today’s comes courtesy of Blackrock’s Daniel Rice who calls for $90 barrels of oil and a doubling of oil stocks, and a tripling of coal stocks in the next three years.
Bloomberg: Daniel Rice, whose BlackRock Energy & Resources Fund rose more than any U.S. equity mutual fund in the past decade, said oil-company stocks may double within three years as crude prices climb toward $90 a barrel.
The global recession didn’t fundamentally change the demand for energy or affect long-term supply constraints, Rice said in a June 2 interview at his Boston office. Coal stocks may triple, he said.
Rice’s $808 million fund gained an average of 20 per cent a year in the 10 years ended May 31, according to data compiled by research company Morningstar Inc. That topped his closest rival, Icon Energy Fund, by 1.55 percentage points.
“It’s all about getting the commodity price right,” Rice said. “That’s what will make us look smart or dumb.”
Stocks that Rice expects to take off include Clayton Williams Energy Inc., a Midland, Texas-based oil and gas producer, and coal companies Arch Coal Inc. and Consol Energy Inc.
The fund holds small and midsize companies with an average market capitalisation of $2.29 billion, according to Chicago- based Morningstar. Those stocks are more sensitive than larger companies to changes in commodity prices, giving investors “more bang for your buck,” Rice said.
Eight of the top 10 performing funds in the past 10 years are focused on natural resources, Morningstar data show.
Rice’s investors need to be prepared for big gains and losses, said Michael Herbst, a fund analyst at Morningstar. In 1998, the fund fell 48 per cent, including reinvested dividends, while it returned more than 50 per cent in 2000, 2003 and 2005.
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