This year’s annual ritual, the Enercom Oil and Gas conference in Denver, kicked off with a recurring theme: Commodity prices are low, producers are lowering costs, and producing more. Nothing here to make you want to jump on the black gold bandwagon. But then again, the world is a dangerous place, probably becoming more dangerous and the global supply of hydrocarbons could be disrupted. The mood is somber and nothing remotely like a “trumped-up oil and gas frenzy. Until something disrupts or dampens supply, we believe all rallies in this space should be sold. WTI under $50 is not a particularly fun business.
Michael Carey Chief Economist USA Credit Agricole provided us with his U.S. forecast
- Us Economy is fundamentally solid
- The global growth outlook is firming
- Monetary policy is slowly tightening
US real GDP is around 2.2% this year and next (vs 1.5% in 2016). If Republicans are going to cut taxes they must have offsets under budget reconciliation rules. The budget deficit limits what can be done because they can’t increase the deficit without Democratic support.
Conclusion: any tax reform changes or spending initiatives are likely to have a limited impact on boosting growth in 2018.