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Oil ‘Stuck In A Range,’ Buy E&Ps & Emerging Market Energy, BlackRock Says

While the expected rebalancing of oil supply and demand is taking longer than BlackRock strategists thought, the price rally in recent days seems to have fueled their fresh sentiment: buy beaten-down exploration companies including emerging-market players.

Global chief investment Strategist Richard Turnill, chief multi-asset Strategist Isabelle Mateos y Lago, chief equity Strategist Kate Moore and chief fixed-income strategist Jeff Rosenberg write that they expect oil to trade "in a range around current levels, as the market rebalances in the second half." Oil prices have been firming after the recent dip, with the price of the U.S. benchmark up more than 2% Monday to $47.03 per barrel, and the international Brent price up 1.7% to $49.60. The United States Oil Fund (USO) rose 1.3% Monday in a limited pre-holiday trading session.

The strategists write:

"Fears of a supply glut have again hit the oil market. An expected rebalancing of supply and demand is taking longer than we thought. We now see oil trading in a range around current levels, as the market rebalances in the second half ... The global oil supply glut hasn’t eased as fast as we thought it would, but we expect to see a reduction in global oil inventories —...

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