Nine months ago Paragon Funds Management wrote about their oil bear market view on Livewire “OPEC initiates a price war; implications”(click the (VIEW LINK) ). They discussed that the US shale revolution and OPEC inaction (reluctance to cut supply) had led to oil markets being oversupplied by ~1.5m bbl/day and with global inventories at excess levels. On the back of this bearish oil price view they initiated a short position in Santos (ASX:STO) and a long position in Qantas (ASX:QAN). Fast forward to today, the oil surplus position has worsened, with oil markets currently estimated to be oversupplied by ~2.5m bbl/day. Paragon has written an update of their thoughts on the oil market and how its pricing outlook could impact some of Australia’s largest companies moving forward, specifically Santos (ASX:STO) and Origin (ASX:ORG). Click the (VIEW LINK) to read the full article (page 2)
Great call John.