Fuel for the Next Leg of the Oil Boom

Did you see Martin’s new, just-released video yesterday? Wow! If not, or you want to see it again, click here! It is so timely, and one reason is because of what’s happening right now around the world.

Case in point: Oil prices are on a tremendous run. Naturally, like clockwork, you can hear the bears line up to grumble … about a potentially steep tumble. I say, “Back off bears. Even though winter looms, it’s time for you to go back into hibernation!”

Why? Because oil prices are cycling higher. And they are fueling a potentially lucrative trend in a group of energy stocks.

We may get a short-term pullback in oil prices, but there is plenty of fuel for a bigger run in oil – and fast-lane profits for select U.S. companies.

My bullish view flies in the face of some industry estimates. Let me show you why the so-called “experts” who predict too much supply and lower prices are full of hot air.

First, an important fact: Oil prices are at their highest in more than two years.


You can see the U.S. crude oil benchmark tested the high from early this year and blasted through it. BOOM!

This shows that momentum is on the bulls’ side. Dips are being bought. This kind of breakout gives us a price target of $65 per barrel!

Why is oil breaking out? I’ll give you four solid reasons …

  • Tensions in the Middle East are heating up. Saudi Arabia and Iran are moving closer to a shooting war. And Saudi Arabia is blockading neighboring Yemen as its troops try to stomp out Shiite rebels there.
  • Whispers are starting that the Organization of Petroleum Exporting Countries (OPEC) will extend output cuts beyond the end of March. OPEC is already exceeding its production cut targets. In September, the cartel hit 137% of its target. In October, it hit 105%. OPEC’s production dropped to a five-month low of 32.5 million barrels-per-day in October.
  • OPEC member Venezuela saw its oil output fall to the lowest level in 28 years. Venezuela produced only 1.86 million barrels per day in October. As a result, the country is on the brink of default. In fact, it’s even delaying payments on debts for the state oil company, PDVSA. This raises the specter that Venezuela’s oil industry will become non-functioning, or have assets seized.
  • Oil inventories in developed economies fell below 3 billion barrels in September for the first time in two years. Lower inventories are naturally bullish.

These are all bullish trends for oil prices? And if there really is a shooting war in the Middle East? If horrific weapons are used in the oil fields of Saudi Arabia? Well, that could send prices much, much higher!

Just to be clear: We don’t want anything bad to happen to Saudi Arabia. Anyway, that country should look to its laurels as the world’s Central Bank of Oil. Another country, an up-and-coming oil and gas producer, threatens to take the crown.

The good news is it’s a country you’re very familiar with.

Welcome to the New Saudi Arabia

By 2025, American oil production will grow by a whopping 8 million barrels-per-a day (bpd). That’s according to the latest estimate from the International Energy Agency (IEA). That kind of growth rate would beat Saudi Arabia’s oil production growth at its highest.

What’s more, the IEA says the rise in U.S. oil production will account for 80% of the increase in world oil production by 2025.

That’s stunning. And solid American oil companies will stand to make a fortune.

So how can you play it?

Well, you could buy the Energy Select Sector SPDR Fund (NYSE: XLE). It’s safe … and boring. But it should do well.

Or you could buy a fund that is leaving the XLE in the dust.


The PowerShares S&P SmallCap Energy Portfolio (Nasdaq: PSCE) is an ETF that, as the name implies, holds a basket of smaller energy stocks. And it is running rings around the XLE.

In the last three months, the XLE is up 8.6%. Not bad. At the same time, the PSCE is up 20.6%. Wow!

Sure, it’s more volatile. This is the kind of fund where you want to buy the dips.

But this is also a roller-coaster ride that could be a thrill ride. Very profitable indeed.

Do your due diligence before buying anything. But don’t ignore this megatrend in U.S. energy.

All the best,

Sean

P.S. Do you want the best information on gold and silver? How about energy metals? I’ll join Rick Rule, Byron King and Brien Lundin to share our very best ideas in gold, silver, lithium and more. Even better – it’s going to be on a gorgeous European cruise aboard the Crystal Serenity. Sailing from Marseille to London. What a fantastic time! What incredible experts. You should get your ticket as soon as possible. Just click here for details: Brodrick.MoneyShow.com.

Leave a Reply

Your email address will not be published. Required fields are marked *

Comments 5

  1. Hugh B. Mulvaney Jr. November 15, 2017

    could you provide some hints/ways to perform “due diligence”? thank you

    Reply

  2. H. Craig Bradley November 15, 2017

    A CHRISTMAS BONUS FOR THE INTREPID

    Open warfare between Saudi Arabia and Iran even with just conventional troops and weapons ( No Nukes, No Migs) would still be disruptive enough for global stock markets in general to qualify as a “Black Swan” event, sorta like Persian Gulf War I (1990). Its not priced-in to the stock market at this time. IF it happens and surprises everyone, there could be a sudden, fast -15% market drawdown (“dip”). Gold would spike and the dollar also would in tandem. Oil would not once the dust settles.

    This would be a golden opportunity to pick-up some high quality company stocks at bargain prices, albeit selectively ( in strongest sectors). Energy has been the sector with the weakest relative strength all year. Its how smart investors make better returns at the expense of panic sellers, but you need to prepare your Christmas shopping list ahead of time and put your Holiday buy (limit) orders in early because when the stock market moves, you may not have much time to react. You might get more than you expected from Santa Clause for the Holidays if the Muslims go at it in Iran. Windfall profits to those with nerves of steel.

    Reply

  3. Laurence Schechtman November 15, 2017

    Oh good,

    If oil prices rise that will help sell solar & wind energy & electric cars.

    Reply

  4. jj November 17, 2017

    Thanks for this article.I never realized that oil prices are at 2 year highs.I think you could be right in the short/intermediate term and maybe that’s good enough.Longer term,there is no way that oil is a good investment.Most of the world is moving away from fossil fuels.It isn’t the future.

    Reply

  5. alroth31 December 5, 2017

    Weiss ratings is recommending to get out of oil as demand is dropping and you are saying the opposite. Al

    Reply