{"id":72640,"date":"2018-04-15T08:10:54","date_gmt":"2018-04-15T08:10:54","guid":{"rendered":"http:\/\/www.bnreport.com\/oil-may-be-about-to-spike-and-jpmorgan-has-trades-to-play-it\/"},"modified":"2018-04-15T08:10:54","modified_gmt":"2018-04-15T08:10:54","slug":"oil-may-be-about-to-spike-and-jpmorgan-has-trades-to-play-it","status":"publish","type":"post","link":"https:\/\/www.bnreport.com\/en\/oil-may-be-about-to-spike-and-jpmorgan-has-trades-to-play-it\/","title":{"rendered":"Oil may be about to spike, and JPMorgan has trades to play it"},"content":{"rendered":"

By Joanna Ossinger<\/strong><\/p>\n

Oil<\/a> prices, already at more than three-year highs, may be about to jump further. And, to JPMorgan<\/a> Chase & Co., crude-related assets are starting to look attractive. <\/p>\n

Brent oil could spike to $80 a barrel if the US and European Union reimpose sanctions on Iran and as Western powers expand the scope of the Syrian civil war<\/a>, JPMorgan strategists, led by John Normand, wrote in a note on Friday. While this might ordinarily seen like a time to avoid cyclical assets, the recent " tax gift" to US corporations and consumers makes it an opportunity to own petro assets, they said. <\/p>\n

\u201cRisks we thought might materialize this summer through Iran sanctions are emerging somewhat more quickly due to events in Syria<\/a>,\u201d said the strategists. New Syrian hostilities are likely to have a muted effect on oil, however, since the nations production has already fallen so deeply due to the seven-year-long war. <\/p>\n

A possible decision in May on Iran sanctions may be \u201cthe start of a process that maintains low-intensity stress on oil markets that can deliver higher prices and above-average volatility," the strategists wrote, comparing it to the Arab Spring of 2011 rather than the major oil shocks of 1973, 1979 and 1990. Since the US doesnt buy Iranian crude<\/a>, it would take sanctions from the EU and even some Asian customers to depress markets materially. <\/p>\n

The forecast follows others calling this a good time to own energy stocks. Morgan Stanley strategist Andrew Sheets has noted that energy \u201chas historically been a very consistent late-cycle outperformer.\u201d Brian Barish of Cambiar Investors and James Paulsen of Leuthold Weeden Capital Management have pointed to energy shares having been out of favor in recent years. Net bullish positions in Brent futures reached a record in the week ended April 10. <\/p>\n

JPMorgans strategists have positioned for higher oil prices that could last three to six months, before US shale production can respond, rather than for an acute supply cut that delivers subtrend global growth. <\/p>\n

\u201cEquity and credit markets probably wont welcome a geopolitical\/supply-driven rise to $80 that could persist for several months," they wrote, but it wont be "an event that drives a bear market in either.\u201d Brent last cost $80 a barrel in November 2014. <\/p>\n

Among JPMorgans oil-related portfolio recommendations: <\/p>\n