Expert: Energy sector will be profitable in 2016

Craig Columbus of Tower Square Investment Management said Monday that the worst-performing sector in 2015 will be profitable next year.

“We are now at peak energy pessimism. If you look at commodity bear-market cycles, they typically last 20 years, but most of the price damage is done in the first six years. We’ve had five consecutive negative commodity-priced years,” the firm’s CEO told CNBC’s “Power Lunch.”

Read MoreOil falls 3% near 11-year low as excess supply weighs

The energy sector of the S&P 500 has fallen over 20 percent in 2015, by far the biggest laggard among the 10 sectors.

Other reasons factoring into Columbus’ optimism involve the dollar and non-OPEC supply.

“Dollar appreciation will still be up, but less, in 2016, and as non-OPEC supply starts to flatten, as that shale production starts to come off, I think it will create opportunity in things like natural gas,” he said.

Read More3 scenarios for oil in 2016: RBC commodity chief

The dollar has gained over 8 percent against a basket of currencies, while natural gas has fallen more than 35 percent in 2015. Natural gas, however, gained more than 9 percent on Monday.

Still, Columbus also said investors would have to be patient. “I thought that once we took out $38 on oil, we would trend back down to the mid- to low-$30s, so I think you have to be patient. Wait for WTI to pull back to you.”
[“source -cncb”]

About the author


Powered by