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Rising Oil Prices: Why to Invest Now
Pinnacle Digest writes: The argument for Rising oil prices in the near term is discussed. This is a timely piece as oil has bounced hard off recent lows and is up more than $4 dollars today alone.
The International Energy Agency (IEA) states that there are 3 factors which cause significant shortages in Crude Oil production. They are technical problems, weather related issues and civil unrest. The key factor, we at Pinnacle believe they have left out, is the inflationary impact. The weather clearly has played a factor in recent weeks as the United States continues to remain in a heat wave without power in many states.
Ebeling has long warned and reminded us of the EU ban on Iranian oil which finally took effect on Sunday. Iran has gone so far as to admit that its economy has already been badly damaged by this embargo which is not more than 3 days old.
Paul explains that instead of the embargo having a dramatic impact on the price of oil, investors should keep an eye on Nigeria and Venezuela who are among the 10 largest countries by proven Crude Oil reserves. These countries both have very shaky political environments at the moment. It has recently been discovered that Nigerian rebels have been stealing upwards of 100,000 barrels of oil a day for many months, which has been estimated at over $140 billion in losses for major companies in the region.
Weather, despite the disaster ongoing in America has also been overlooked in the near term. Hurricane season is here again. The National Oceanic and Atmospheric Administration predict as many as 15 storms in the 6-month season that began in June. Based on past experience, some of those could move far enough into the Gulf of Mexico to interrupt both drilling and refining. It could be a rocky upward period for the price of crude oil and a bullish one for many domestic producers in North America.
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