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“[Prices] might have bottomed…”
Bloomberg reports the International Energy Agency (IEA) says the bottom is in for oil prices.
Crude oil now trades just shy of $40 per barrel.
The agency believes a combination of events have shored up prices:
- Lower than expected Iranian oil output following its re-entry into world markets
- A tentative production “freeze” agreement at current levels between Russia and Saudi Arabia
- Continued bankruptcies for U.S. shale oil producers, forcing domestic production lower.
But if you think now is the time to jump back into oil, you may want to reconsider…
The chart below shows five previous calls for a “bottom” since oil began its 75% slide in mid-2014.
As you can see, they were all premature…
Bottom line: No one has a crystal ball. The oil market has made fools of the “experts” for well over 18 months. Don’t try to time the bottom.
If you want to invest in oil today, stick to the ExxonMobils and Chevrons of the world. Their businesses are diversified and cash-rich enough to weather the current downturn.
Otherwise, wait for a clear uptrend to reassert itself before moving back into smaller oil players.
Mega Trends Investing Editor Teeka Tiwari explains how to recognize a “real” bottom (and new uptrend) right here.
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