Black gold

The oil price has lost 44% since June last year. Over the past weeks it has continued to weaken due to the crisis englobing SVB to Credit Suisse. As investors like easy narratives, we started to see comparisons with the behaviour of the oil price during the Global Financial Crisis. To us this looks premature as what we currently see is ( still ) far away from a full-fledged banking crisis and the risks of an imminent hard landing of global economies still appears pretty remote to us. Interestingly enough the lower oil price is deflationary in nature and certainly an important indicator on the watch list of central bankers considering raising rates aggressively. We therefore maintain our selective investments in oil and oil services companies who continue to produce strong cash flows and remain lowly valued.