We are in erratic times with the price of oil, making any investment in the energy sector inherently unpredictable. The CBOE Crude Oil Volatility Index (INDEXCBOE: OVX), an index that measures the volatility of crude oil prices, surpassed 60.0 on February 3, a level not seen since 2009. In other words, crude oil prices are more volatile than they have been in over five years.
That makes it difficult to find reliable investment vehicles. According to the Wall Street Journal, in December and January market analysts issued 98 downgrades to energy stocks, but also 62 upgrades, suggesting that investment advice is all over the map.
Seeing as how we here at the Executive Report have also missed some calls on the energy sector during the Great Oil Bust of 2014-2015, we will take a bit of a different tack this week.
Oil Glut? Forget Producers and Refiners, Buy the Shippers
The oil bust means there is a heck of a lot of oil sloshing around. But just because there is oversupply that does not mean that there isn’t demand for oil. While oil demand may not be as high as many had anticipated, it is still at its highest levels on record. The IEA says that global oil demand hit 94.4 million barrels per day in the fourth quarter of 2014, an all-time high and 1 million barrels per day higher than the year before.
As we have mentioned in recent weeks, the collapse in oil prices makes it difficult to find the upstream companies that will provide investors…