Is This Summer Really a Time to Buy Oil Stocks?

I don’t typically buy oil stocks in the summer. 

By the time the heat starts beating down and we crank up the AC, we’ve already positioned ourselves in the oil sector. 

That makes sense, doesn’t it? 

After all, summer is the time of year when oil demand and prices are usually at their highest, and the media hype is at its greatest. The herd piles in as prices climb, and we reap the profits that have built up over time — at a certain point it feels like you’re shooting fish in a barrel.

And then there’s the x-factors in play… 

The geopolitical wild cards bare their teeth, and we see prices spike like we did in 2022 when the Russo-Ukrainian war ramped up. 

Two years later, the risk premium on crude prices had shifted to the Middle East. If Iran doesn’t balk on its latest threat to retaliate against Israel, another spike feels inevitable. 

Last time, we saw the country launch a massive — yet ineffective — drone strike into Israel. The damage was negligible, mostly due to the fact that everyone knew it was coming. 

The stakes seem to get higher each time, and that’s not even mentioning the situation down in Venezuela, where Maduro is flatly refusing to give up power!

Look, we’ve been harping on the geopolitical variables that could put a hefty premium on crude prices. 

But there’s a reason I’m not selling oil stocks right now, and neither should you.

Last week, I mentioned that the supply/demand fundamentals were getting tighter down the second half of 2024, but just how tight are we talking?

It’s important to understand a few things.

Global oil consumption is climbing higher. By the third quarter of 2025, OPEC projected demand to reach 107.37 million barrels per day. This would put a strain on supplies because of where our supply capacity is located. 

As you can see below, OPEC isn’t expecting demand to rise through the end of the year:

Their projections estimate that total world demand will reach 104.85 million barrels per day in Q3 and 105.57 million barrels per day by Q4. 

I know what you’re thinking: Why on Earth would you trust OPEC’s numbers? 

Well, we don’t… not exactly. Considering OPEC field data is hidden from the public, it’s hard to place any sort of trust in the 12-member group. However, when it comes time to finally unwind the current production cuts, you can bet they’ll be using their numbers — not the IEAs!

In other words, OPEC will likely keep those production cuts in place well into 2025. The oil cartel has been adamant that it will defend oil prices, and members are more than happy with crude at $80/bbl. 

That brings us to the question of where the world WILL get its supply if OPEC keeps a tight lid on their cuts. 

And right now, non-OPEC oil supply growth is centered around four countries — Brazil, Canada, the United States, and Guyana. 

Together, these four countries are responsible for 75%, or 1.1 million barrels per day, of non-OPEC supply growth through 2025… and we’re already starting to see forecasts trim supply projections in Brazil and Guyana. Guyana in particular is going to need time to boost output. 

That could be a problem when U.S. production growth remains relatively flat, which is what’s taking place right now. Sure, we saw a huge year-over-year rebound in 2023 as U.S. output climbed more than a million barrels per day.

Unfortunately, we’re simply not going to see that happen again anytime — not anytime soon. 

That alone will set a premium on a small, elite group of Permian oil stocks like this hidden investment gem.However, it’s not just attracting investors’ attention, but also from Big Oil. 

We’ll talk about why next time.

Until next time,

Keith Kohl

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A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.

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