Oil has come a long way this year as prices soared due to the Russian-Ukrainian war – then turned volatile. The global benchmark, Brent, hovered near its all-time high of $147 in March, but crude prices have generally fallen since then, weighed down by growing worries about a possible recession and the strength of the U.S. dollar. Prices saw a respite on Wednesday after the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, agreed to the deepest production cuts since the start of 2020 in a bid to spur a recovery in crude prices. As oil prices remain far from March highs, fund manager Eric Nuttall remains optimistic. “I think we’re in a multi-year bull market for oil that’s going to last at least six years,” Nuttall told CNBC’s “Street Signs Asia” on Wednesday. Stock Picks Oil stocks have clearly been the winners of the market rout this year. The energy sector is the only positive sector on the S&P 500 this year and is up more than 50% so far this year. Nuttall, partner and senior portfolio manager at Ninepoint Partners, which manages more than $8 billion in assets, names three stock picks to play an oil rally. He likes Texas-based Diamondback Energy for its “17 years of drilling inventory” and its 11% dividend for 2023. Canadian integrated energy company Cenovus Energy is also on his list. According to Nuttall, the company has 30 years of oil reserves and attractive free cash flow indicators. He thinks the company will buy back 10% of its shares and pay a 15% dividend in 2023. Rounding out the list is Canadian oil sands producer MEG energy. Nuttall said the company has 30 years of oil reserves and also has attractive free cash flow metrics. “With the potential to go private with just over three years of free cash flow and the stated intention to use 100% of free cash flow for buyouts later next year, we believe investors are getting free $35 billion in undiscounted free cash flow,” Nuttall added. Why Oil Will Be in a “Multi-Year Bull Market” The portfolio manager expects demand to rise for at least the next 10 years. “But the real story is about supply,” he said. Read more Goldman Sachs Raises Crude Price Forecast After ‘OPEC+ Goes West’ NYU’s ‘Dean of Valuation’ Says These Big Tech Stocks Are a Better Bet Than ‘Traditional Safe’ Companies » Is it time to buy the drop? According to Wall Street, Nuttall noted that U.S. shale has supported global supply “for 8 years” as OPEC production failed to keep pace with strong demand. But these shale companies are now prioritizing dividends and buyouts as investors demand to be “compensated for the misery of investing in this space over the past decade”, he added. Meanwhile, Nuttall said OPEC has “largely exhausted” its spare capacity, with additional capacity likely to take years to come online. Meanwhile, traditional oil majors, such as ExxonMobil, Shell, BP, are “handcuffed by the wake up call” and have begun to focus on decarbonization, Nuttall said. “They’re taking the high margin money that could have gone into traditional oil and gas and putting it into the shittiest business in the world, which is alternative energy projects, just to appease the minority of their people. shareholder base,” he added. Nuttall thinks the mismatch between demand growth and supply growth going forward means that oil prices need to rise high enough over the next two to three years to “kill” discretionary demand. It’s a tough question, according to Nuttall, who estimates that the global economy consumed 92 million barrels of oil a day at the height of the Covid-19 pandemic – a situation described by Nuttall as “the worst economic environment possible. “. He believes it is “very, very difficult to kill demand” with a recovering global economy now adjusting to pre-pandemic normal. “It’s this lag between supply growth and demand growth going forward, which is why I think we’re in a multi-year bull market for oil,” he said. Nuttall estimates that West Texas Intermediate prices – the US benchmark – will hit $100 a barrel by the end of 2022, “regardless of any regional recession. That would rise to over $150 a barrel over the next 2 years, WTI was trading at around $87 early Thursday, while Brent was around $93 a barrel.