Shares I love: Ophir Energy

Despite the market's current short-term focus on global macro data, the long-term case for investing in commodities remains a compelling one, according to Neil Gregson, manager of the JPM Natural Resources Fund.

"While it is impossible to know when the current sentiment towards commodity sector fundamentals will reverse, the long-term structural case for an investment in commodities remains compelling," he says. "Investors should look beyond current short-term concerns, such as the European debt crisis, and focus on the medium-term outlook for investments - especially as we are seeing impressive individual stock performances in the oil and gas sector."

Mr Gregson says opportunities in what he describes as "new frontiers" have energised the oil and gas sector. Examples include Ophir Energy , a FTSE250 explorer which has interests in 17 oil and gas projects in eight African countries. Over the first four months of this year, this company's shares rose 95 per cent, in contrast to the oil price which only went up 4 per cent. The company is the largest net acreage holder offshore East Africa.

"While rich oil basins have been known to exist in new frontiers for some time, it is only now that they are being unlocked, and it is not the short-term oil price rise, but rather a realisation that the medium-term assumptions for the oil price have changed, that has energised the oil and gas sector," says Mr Gregson.

He continues: "In 2012 alone, we have reaped the substantial benefits of investments in these new frontiers which have outperformed both a return from the majors and the rise in the oil price." Mr Gregson expects the next 10 years will see more of the same as emerging markets lead commodity demand growth as well as ongoing supply issues in the sector. "We believe the natural resources sector continues to offer one of the most exciting investment cases available," he concludes.

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