3 stocks to consider when Crude Oil is around $50

By | February 26, 2015

I’ve been tracking a variety of potentially catastrophic events and, I am proud to say that I am a contrarian at heart, what I know is… despite the most recent uptick the price of black gold has slumped almost 50% since last six months following a longest running decline in last couple of decades. There are simply too many variable theories involved to derive any kind of meaningful logic to the massacre.

What trails next is a little harder to see through, with the new found shale industry in the U.S showing little signs of decelerating amid concerns of slowing global economy there are good reasons to foresee that the bloodbath is here to stay for some more time. Furthermore the OPEC big brother Saudi reluctant to give up market share, as Philip Whitaker at Golden Consulting says “let economics do the work”.  The implications are clearly foreseeable.

We have entered a new chapter in oil markets where oil has begun to operate as a non-cartel commodity, in the midst would be shareholders wonder if oil has finished dropping or is there a further room for decline. The inflation adjusted trend line still points down ward while the so called investment pundits and newsletter vendors want to put their flags down and say this is it, this is the bottom even though they don’t want to risk all their monies on this price point.

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There’s not a lot of chatter going around this moment other than how this is historic and a vague opportunity, no there isn’t a right price for oil or where it would be six months from now – everyone is guessing including me. I know most of you are always on the lookout for secret cabals who consistently get 1000% returns. And as a consequence fall for newsletter vendor’s spiels that lure you into buying the subscriptions.

Unquestionably this is a good time indeed to look into oil stocks however it doesn’t undermine the importance of distinguishing the babble from real hard facts. The current oil prices create opportunities without a doubt. And oil industry in the US is mired with exploration and innovation costs as miners try to access remotest reserves of oil.

The recent massacre in the price of oil to less than $50 a barrel daunts to shut of expensive miners who need at least $70 to break even. Therefore American oil producers need to cut their costs to a level at which they can profit at lower prices. So the one hope is technological innovation to cut costs if the US is ever going to achieve energy independence, thus emerging out of the financial massacre that looms large.

Oil companies and their financiers are usually faced with the dilemma of the markets they typically make their own predictions about global oil requirements before making investments in these enterprises as unexpected fall in the prices doesn’t necessarily shut down existing production but it prevents or postpones the development of new reserves.

Well, that makes an impeccable case to look for investing in oil stocks. Let’s look into some of the prominent shale oil miners and ancillaries in the US who are innovative in their methods with firm hands on costs.

A deeper analysis of these would be the gist of my next article.

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