InvestingDaily.com

Account Information

  • My Account

    Manage all your subscriptions, update your address, email preferences and change your password.

  • Help Center

    Get answers to common service questions, ask the analyst or contact our customer service department.

  • My Stock Talk Profile

    Update your stock talk name and/or picture.



Close
FEATURED STRATEGY

Renowned Economist Paints Startling Portrait of the Future

Renowned Economist Paints Startling Portrait of the FutureRenowned economist Dr. Stephen Leeb has predicted the last 5 major market shifts. And he’s just revealed his latest prediction: “A market meltdown will wipe out the savings of millions of Americans.” In his latest report, he details which stocks will come crashing down in the coming months, as well as a select few that could double or even triple in value over the next few years. Get your copy here.

 

Looking Past Oil’s Bummer Summer

By Robert Rapier on August 5, 2016

Oil prices had a great rally since the lows of February, and closed above $50 per barrel for several days in early June. But the price of West Texas Intermediate (WTI) peaked during the second week in June, and it has steadily declined on a weekly basis since:

160805teloilprice

Why has this happened? There are two major reasons.

The first is that crude and product inventories remain uncomfortably high. While we have focused a lot on crude oil inventories, finished product inventories have been growing for months. Globally, they are more than 10% higher than a year ago. In the U.S., despite record demand for gasoline, record production has ensured that gasoline inventories are well above seasonal norms:

160805gasinventories

This has refiners talking about paring back production, which will obviously reduce their need for crude oil in the short term. That has put downward pressure on oil prices.

The other major downward catalyst was the June 23 referendum in the U.K., won by those who favor exiting the European Union. This has significantly strengthened the U.S. dollar against many world currencies. Since most of the world’s oil trade is priced in dollars, a stronger dollar means many countries are paying more in local currency for their oil.

How has this affected the global supply/demand picture? A year ago it was projected that supply and demand would come back into balance in the second half of 2016. Now those projections have been pushed out to early 2017:

160805supplydemand

Annual demand is projected to continue to grow robustly (with occasional hiccups), while supply is expected to be stagnant over the next year. But given the tremendous inventory overhang, conditions are likely to remain difficult for the next one or two quarters for oil producers, and potentially even longer for refiners.

As I have noted on several occasions, I don’t expect that we will revisit the lower $30s for a barrel of oil. If we do that level will present an excellent buying opportunity, as it did earlier this year, given the long-term picture.

To find out which stocks are likeliest to benefit from the coming moves in oil and gas prices, consider subscribing to The Energy Strategist and MLP Profits.

(Follow Robert Rapier on Twitter, LinkedIn, or Facebook.)

 


You might also enjoy…

 

Forget Buy and Hold. Here’s how to retire faster…

I’m not a fan of “buy and hold.” Gurus like to tell you that patience is the key, but I call horse puckey.

We’ve discovered an investing technique that consistently pays out easy-to-repeat profits.

One that’s proven to beat the market 2,082% in head-to-head testing.

And one that’s generated over 488 winners since 2011.

This method is so powerful, in fact, some of the investors we’ve let use it reported back to us saying they’ve made $71,425… $82,371… and even as much as $151,000 in a single year thanks to this “trick.”

That’s how powerful this investing technique is!

What what exactly is this mysterious method? I’ve put all the details together here.

Stock Talk — Post a comment Comment Guidelines

Our Stock Talk section is reserved for productive dialogue pertaining to the content and portfolio recommendations of this service. We reserve the right to remove any comments we feel do not benefit other readers. If you have a general investment comment not related to this article, please post to our Stock Talk page. If you have a personal question about your subscription or need technical help, please contact our customer service team. And if you have any success stories to share with our analysts, they’re always happy to hear them. Note that we may use your kind words in our promotional materials. Thank you.

You must be logged in to post to Stock Talk OR create an account.

Create a new Investing Daily account

  • - OR -

* Investing Daily will use any information you provide in a manner consistent with our Privacy Policy. Your email address is used for account verification and will remain private.