One of the best things about commodity markets – and any sort of “real” asset – is that ultimately prices are based on supply and demand.
If the price of oil is “too high,” there’s a market response – rising production and falling demand – that pushes prices back into line over time.
Of course, oil prices can rise or fall in the short-run due to speculative flows in futures markets; in fact, that’s something we watch closely in Energy & Income Advisor over time.
However, ultimately, the price of oil doesn’t rise because people are excited about buying oil — crude rallies when demand for the commodity rises faster than supply.
It really is that simple.
Inflection points in the supply demand equation for oil are rare. In the period from 1998 through 2002, for example, rising demand for crude from emerging markets including China and India shifted the oil market from a period of glut to an era of scarcity. Ultimately that sent crude from lows in the teens in the late 90’s to highs around $150/bbl in 2008.
We believe we’ll look back on 2019 as the year we reached another major inflection point for oil. Specifically, the Saudi -led pump-at-will strategy initiated five years ago has finally had the desired effect – the recent era of persistent glut and shale oversupply is giving way to a new period of tightening supply and demand conditions.
As we approach the end of 2019, it’s time for a detailed assessment and audit of our outlook for energy prices, stocks and our portfolio recommendations.
In this issue, we’ll start with our customary deep-dive outlook into crude oil. In subsequent issues this month, we’ll take a closer look at the prospects for the major energy-related sectors we cover and outline our game plan for investing in the group in the year ahead.
1| Feature: Oil Market Deep-Dive. Our look at oil market supply and demand trends and what it means for prices in 2020 and beyond.
2| Portfolios. Our updated model portfolio recommendations.
3| Endangered Dividends List. Our look at some of the stock most at risk of dividend cuts as we approach the end of 2019.
Your complete guide to energy investing, from growth stocks to high-yielders.
In October 2012, renowned energy expert Elliott Gue launched the Energy & Income Advisor, a twice-monthly investment advisory that's dedicated to unearthing the most profitable opportunities in the sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships.
Elliott and Roger on Jan. 30, 2020
Balanced portfolios of energy stocks for aggressive and conservative investors.
Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.
Our assessment of every energy-related master limited partnership.
Roger Conrad’s coverage of more than 70 dividend-paying energy names.