Oil Update: Leader Capital believes oil at $77 by July 2016
June 8th, 2016
The oil markets continue to rebalance towards equilibrium. We are updating our oil call to reflect this change in the oil landscape with oil nearing parity much faster than expected. While OPEC has struggled to come to a decision on output levels, we've seen a drastic reduction in supply from Non-OPEC members coupled with events (Canada wildfires, Nigeria rebel attacks) that have pulled expected supply numbers down. Last month, Goldman Sachs released a report saying the markets were at parity confirming our earlier oil update from April.
We are projecting near parity by end of 2Q2016 with our update estimates to account for various disruptions in supply and the move up in oil, leading us to update our call to $77/bbl by mid-summer. This updated number stems from the fact our model takes into account current oil price action with supply and demand. The fact we are reaching near parity levels a quarter sooner paired with current price action means the market is nearing fair value and our model takes those levels into account and has adjusted accordingly.
Please Reference the appendix for data on our estimates.
Investments in debt securities typically decrease in value when interest rates rise. The risk is actually greater for longer-term debt securities. Investment by the fund in lower-rated and nonrated securities presents a greater risk of loss of principle and interest than higher-rated securities. The fund is exposed to credit risk where lower-rated securities have a higher risk of defaulting on obligations. Investments in foreign securities involve greater volatility and political, economic and currency risks. They may also have different accounting methods. Investments in asset-backed and mortgage-backed securities include additional risks that investors should be aware of such as credit risk, prepayment risk, possible illiquidity and default, as well as increased susceptibility to adverse economic developments.
Investors should consider the investment objective, risks, charges and expenses of the Fund carefully before investing. The Prospectus contains this and other important information about the Fund. For a current Prospectus, call 800-269-8810 or go to www.leadercapital.com
Please read carefully before investing.
The Funds are distributed by Foreside Distribution Services, LP.