A Canadian portfolio manager bullish on the energy sector says oil prices are hovering at around two-month lows thanks to the removal of price premiums related to geopolitical risks, which he says is good news for investors.

“What we've had is the removal of any geopolitical risk premium that was in the price, which honestly, for energy investors, is a good thing,” Eric Nuttall, partner at Ninepoint Partners, told BNN Bloomberg in a Tuesday interview.

“You don't want to have a large premium because then you’re always worried about headline risk and if some peace treaty comes to pass and oil falls five dollars. So, when we look at price relative to global oil inventories, we can now say that there is no risk premium.”

Nuttall said that energy markets are significantly less concerned about major disruptions to the global oil supply despite ongoing tensions in Eastern Europe and the Middle East, but he still sees the price of oil climbing in the coming months.

“We're heading into the summertime when seasonal demand will uptick,” he said.

“We have inventories falling to their lowest levels in history by the end of this year, so that's very supportive of about an US$85 to $90 oil price.”

Nuttall added that oil markets are also looking ahead to OPEC+’s next meeting in June, as representatives of the organization’s member states give mixed messages about supply quota plans.

Russia’s Deputy Prime Minister Alexander Novak said on Tuesday that OPEC+ is analyzing the possibility of increasing oil output along with all other options, however, Nuttall said the organization’s next moves won’t be made clear until the meeting.

“There's always dramatics heading into any significant OPEC+ meeting… you typically will see trial balloons released… I don't think they've made up their mind. They typically don't until the event actually takes place,” he said.

“From my perspective, I think you'll see the continuation of them being pre-emptive, precautionary and proactive in terms of managing oil supply.”

Nuttall said OPEC+ is likely to keep a significant number of barrels out of the market and wait for demand levels to pull them back in, rather than pushing more barrels into the global supply, which he said is an important distinction.

“If you push barrels onto a market, you're essentially pushing down price. If you allow them to be pulled from you, that's price agnostic,” Nuttall said.

“Eventually, I think in a year's time, as the barrels are pulled from them, the market narrative is going to switch back to a shrinking OPEC+ spare capacity, insufficient investment and a very, very bullish outlook for oil in the next two to three years.”

With files from Bloomberg News