February 2015

On Wall Street – 5 Big Ways Low Oil Prices Could Affect Your Clients

Mineral rights. Oil executives. Small business owners in local oil-rich economies — or manufacturing entrepreneurs whose transportation costs have plummeted.

As oil prices have plummeted since last fall, many clients are finding that their circumstances have shifted, and that they need their advisor’s help to navigate and understand a volatile market.

“We’re spending a lot of time talking with clients, making sure that we not engaging in knee jerk reactions,” says Jesse Clinton, a partner and managing director at Snowden Lane Partners and who has clients with mineral rights in Texas. “We’re looking at what is our exposure to oil and maybe how we can take advantage of it.”

In a recent research note, Credit Suisse analysts Jan Stuart and Johannes Van Der Tuin wrote that they thought the low point in prices had not arrived, “since fundamentals will likely not begin to improve until late this quarter.” They lowered their oil price forecast tough for West Texas Intermediate crude to $44 per barrel in the first quarter; they also pushed back their estimate of when oil prices would rebound to $75 per barrel to mid-2016.

Of course, oil prices won’t stay low forever. But while they are in the dumps, advisors should be mindful of the many ways their clients may be affected — and act accordingly.

 

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