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Oil Bottom Coming ‘Sooner Rather Than Later’

Oil prices are falling again on Monday, but a bottom is in sight, according to JPMorgan Asset Management's David Lebovitz.
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Oil prices are falling again on Monday, but a bottom is in sight, according to one analyst. ‘Right now, what we’re dealing with in the oil space is an oversupply issue,’ said David Lebovitz, global markets strategist at JPMorgan Asset Management. ‘We need to work through this excess supply before prices will find a bottom. We are optimistic - given cuts in production, given cuts in the number of rigs which are operational – that we will find a bottom sooner rather than later, but this really comes back to traditional supply and demand dynamics.’ Lebovitz doesn’t think the energy sector’s woes will spark at U.S. recession. ‘When we look at the oil and gas sector, compared to the housing sector back in 2007-2008, the comparisons are on a completely different scale. You have a labor force in the oil and gas space of about 200,000 workers and a construction labor force of about 6.5 million.’ Still, stocks and oil prices have been moving in lock-step in recent weeks, even though the energy sector is just 7 percent of the S&P 500. Perhaps dovish tones from the Federal Reserve’s statement on Wednesday, its first one since raising rates for the first time in nearly a decade last month, will help unhook markets from oil prices. TheStreet’s Scott Gamm has details from Wall Street.

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