Have you changed your tune yet on oil yet? Some investors can’t help but get that twinge of excitement when they see their oil stocks jumping higher like they have been this week. But what’s more important to understand isn’t that the oil sector is gaining momentum, it’s that it’s happening without exorbitantly high prices.
Last month, I told Energy and Capital readers that I couldn’t think of a better time to take advantage of an oversold oil market. That call probably didn’t surprise anyone that’s read my work for the last 18 years; I have a tendency to beat the drums when I think the market overreacts.
I have no problems telling you when the market is wrong — and we can be sure as hell it was!
We saw investors run scramble for the exit the moment OPEC announced it was opening the door to easing its production cuts next year. Coupled with the latest tirade from the IEA regarding a slowdown in global demand, we have a recipe for oversold oil prices.
Imagine my complete lack of surprise that WTI prices rallied more than $10/bbl within four weeks.
But it’s not enough to sit back and tsk-tsk anyone foolish enough to dump their oil stocks at the beginning of the summer driving season.
In fact, I think crude prices are gaining steam, and here’s why… Our analysts have traveled the world over, dedicated to finding the best and most profitable investments in the global energy markets. All you have to do to join our Energy and Capital investment community is sign up for the daily newsletter below.
Look, there’s a reason why I keep bringing up the demand disconnect taking place right now.
It’s difficult not to call out bearish forecasts from the IEA and EIA when they consistently have to go back and revise their predictions. It’s almost as if their stats only exist to serve the current rhetoric being touted in the media.
Have there been some concerns? Absolutely.
We’re not blind to the recent worries over China’s oil demand after the country posted weaker crude imports during the first six months of 2024. The latest economic data showed that China’s economy grew by 4.7% during the second quarter; that was a bit lower than the 5% people were expecting and certainly lower than the 5.3% it grew by in the first quarter.
However, this is where part of the disconnect comes into play. While China is a strong source for global demand growth, it’s not the sole catalyst for higher crude prices.
Meanwhile, the U.S. appears to have found its thirst for crude once again, with the latest numbers from the EIA showing petroleum demand at 20.9 million barrels per day — that’s 3% higher year over year.
In fact, the world’s liquids consumption hit an all-time record last year, averaging 103.4 million barrels per day in 2023. Ask yourself if this sounds like a massive slowdown to you — it’s not.
If we were simply focused on China to carry the weight of global oil demand growth on its back, then I’d agree there’s cause for concern.
Fortunately, that crown is being passed right before our eyes. Perhaps you remember earlier this year when I told you to keep your eyes on India? India’s GDP rose 8.2% during the first quarter of the year.
More importantly, India’s oil consumption is going to continue growing for the foreseeable future. Current projections are that India’s oil demand will climb to 7 million barrels per day by 2030.
Let’s see how long it is before that number is revised.
Until next time, Keith Kohl 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. For nearly two decades, Keith has been providing in-depth coverage of the hottest
investment trends before
they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution
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where he and his readers take advantage of the newest and most groundbreaking medical therapies being
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Check us out on YouTube!P.S. Right now oil prices are starting to gain momentum, and you know what? There’s still plenty of room to run this summer.
And it’s not just investors that are hungry for oil profits. Major companies like Exxon have been paying out tens of billions of dollars to buy up the best drillers around, like the $60 billion it shelled out for Pioneer Natural Resources.
Maybe it’s time you check out this red-hot oil stock before Big Oil scoops it up at a premium — I put all the details together for you right here.
