Oil to fall, underpinning growth: Credit Suisse
By Jeremy Gaunt, European Investment Correspondent
LONDON (Reuters) - Credit Suisse's investment arm is banking on commodity prices to fall over the rest of this year, with the price of crude oil dropping back to between $100 and $120 a barrel, one of its top executives said on Thursday.
That should allow for modest economic growth in the United States and other developed countries and be conducive to a rebound in equities and corporate credit, Bob Parker, vice chairman for asset management, told the Reuters Investment Outlook Summit in London.
"We have been taking profits on our commodity positions," he said.
Parker said there were a number of factors arguing for a pull back in the commodity price boom in general and the oil spike in particular, both of which have triggered fears of inflation and consumer spending stress.
Slowing U.S. and European economies should lower demand for oil and central banks appear to be working together to dampen commodity inflation with hawkish comments about monetary policy, he said.
In addition, Credit Suisse sees the easing of extraordinary oil demand from China.
"The Chinese have been overstockpiling oil ahead of the Olympics," Parker said. "Shipments of oil to China might come off (in July). There is an argument that the strength of stockpiling by China should now reverse somewhat."
Partly as a result of this, Parker said his firm was expecting the developed world to go through a sustained period of moderate, or mediocre growth, rather than a recession.