• 5 mins French Strike Disrupts Exxon And Total’s Oil Product Shipments
  • 2 hours Kurdistan’s Oil Exports Still Below Pre-Conflict Levels
  • 4 hours Oil Production Cuts Taking A Toll On Russia’s Economy
  • 6 hours Aramco In Talks With Chinese Petrochemical Producers
  • 7 hours Federal Judge Grants Go-Ahead On Keystone XL Lawsuit
  • 9 hours Maduro Names Chavez’ Cousin As Citgo Boss
  • 15 hours Bidding Action Heats Up In UK’s Continental Shelf
  • 20 hours Keystone Pipeline Restart Still Unknown
  • 1 day UK Offers North Sea Oil Producers Tax Relief To Boost Investment
  • 1 day Iraq Wants To Build Gas Pipeline To Kuwait In Blow To Shell
  • 1 day Trader Trafigura Raises Share Of Oil Purchases From State Firms
  • 1 day German Energy Group Uniper Rejects $9B Finnish Takeover Bid
  • 1 day Total Could Lose Big If It Pulls Out Of South Pars Deal
  • 1 day Dakota Watchdog Warns It Could Revoke Keystone XL Approval
  • 2 days Oil Prices Rise After API Reports Major Crude Draw
  • 2 days Citgo President And 5 VPs Arrested On Embezzlement Charges
  • 2 days Gazprom Speaks Out Against OPEC Production Cut Extension
  • 2 days Statoil Looks To Lighter Oil To Boost Profitability
  • 2 days Oil Billionaire Becomes Wind Energy’s Top Influencer
  • 2 days Transneft Warns Urals Oil Quality Reaching Critical Levels
  • 2 days Whitefish Energy Suspends Work In Puerto Rico
  • 2 days U.S. Authorities Arrest Two On Major Energy Corruption Scheme
  • 3 days Thanksgiving Gas Prices At 3-Year High
  • 3 days Iraq’s Giant Majnoon Oilfield Attracts Attention Of Supermajors
  • 3 days South Iraq Oil Exports Close To Record High To Offset Kirkuk Drop
  • 3 days Iraqi Forces Find Mass Graves In Oil Wells Near Kirkuk
  • 3 days Chevron Joint Venture Signs $1.7B Oil, Gas Deal In Nigeria
  • 3 days Iraq Steps In To Offset Falling Venezuela Oil Production
  • 3 days ConocoPhillips Sets Price Ceiling For New Projects
  • 6 days Shell Oil Trading Head Steps Down After 29 Years
  • 6 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 6 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 6 days $1.6 Billion Canadian-US Hydropower Project Approved
  • 6 days Venezuela Officially In Default
  • 6 days Iran Prepares To Export LNG To Boost Trade Relations
  • 6 days Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 7 days Saudi Oil Minister: Markets Will Not Rebalance By March
  • 7 days Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 7 days Rosneft Announces Completion Of World’s Longest Well
  • 7 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
Alt Text

U.S. Shale To Beat Saudi Production Growth

In its latest report, the…

Alt Text

Ghana Looks To Ramp Oil Production

A relative newcomer to the…

Todd Royal

Todd Royal

Todd Royal is an independent strategic consultant, researcher and author on energy matters based in southern California.

More Info

Why Oil Investors Should Look Beyond The OPEC Meeting

Trader

The recent rally had investors of all sizes ecstatic at the prospect of oil rising when in reality it had more to do with short seller contracts coming due. For better or worse oil isn’t going back into the $100 a barrel range or anywhere close unless something drastic happens to cut supply.

A stable and climbing market won’t be sustained based upon rumors or even confirmations that Iran will or won't attend next month’s OPEC meeting in Algeria. Saudi Arabia is still pumping oil at record volumes over OPEC’s protests, and now the Chinese want to export oil products as well. The Saudi’s have increased production, fighting for market share with Iran, Russia and U.S. shale.

The Chinese government will further dampen oil demand, and temper prices, as they are curtailing oil production at hundreds of facilities ahead of the G20 Summit in September, in Hangzhou, to move towards clean air and skies while they are front and center on the world stage.

Further factors weighing against oil rising are potential increased production coming from Iraq, Libya, Canadian oil sands, and a possible ceasefire with rebels in Nigeria that could bring hundreds of thousands of new barrels of oil to an already oversupplied market. Meanwhile, the global economy is not exactly growing at an impressive pace.

With oil flirting with $50, numerous shale drillers have indicated returning to the market. If these heavyweights are willing to drill at much lower prices than seemingly they could a year or two ago, that could lead to downward pressure on crude prices. There isn’t enough demand to chase all the oil the world currently has. Simply put, we could be seeing a replay of 2014 all over again.

But there is a bright side to the negative news. When noted distressed debt buyers are spending hundreds of millions of dollars buying oil assets that is great news for investors with long-term outlooks. Once the U.S. Presidential situation is resolved and other federal and state elections that will also bring stability to shaky markets. Related: Can Fire Ice Replace Both Oil And Renewables?

But here’s where this gets tricky – there are disputed interpretations of the current state of the oil market. Merrill Lynch believes oil will rise significantly the next ten to twelve months, but Goldman Sachs believes the exact opposite. What can savvy, common sense investors attempt to glean from contradictory news? A few ideas to consider when purchasing any oil assets.

Look past the headlines and into companies where there are opportunities to purchase debt into equity ownership. Oil and gas markets have been down this road before, and eventually oil will rise again. Populations continue rising in places such as India and Africa, and while their economies develop, they will continue needing oil and natural gas for long-term economic growth. Energy and growth have direct causation on countries moving in positive directions.

Oil is still an incredible growth opportunity based upon the fact that investment management firms have amassed over $100 billion to purchase energy assets. Banks are no longer allowing energy firms extended credit, or loans to keep companies afloat. Prospects abound.

There is a reason $100 billion has been raised, and now is the time to find companies with solid energy assets that supposedly no one wants or considers investment grade worthy. Wise oil investors won’t pay attention to whether or not Iran is attending an OPEC conference, and instead look for developed or undeveloped fields with mature to spectacular potential on the cheap.

By Todd Royal for Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News