Why You Should Invest In Oil Today
It is a crude awakening. Everyone always thinks about the supply of oil when it comes to setting prices at the pump. Headlines usually read “OPEC is holding output of oil steady”. However there is the other side of the equation which is demand. Demand in the oil market has dried up.
Learn about how to invest in the oil market today.
A truism of the oil industry is that the cure for low prices is low prices. With lower prices, less oil is pumped and supplies begin to tighten. However, that ignores the other side of the equation: demand. Last week, the International Energy Agency cut its 2015 global-demand forecast for the fifth time in six months. This time the reason for slackening demand is due to Russia, which now predicts a recession next year. The Middle East, Mexico, Brazil and other oil producers will also suffer as crude oil prices slide.
As mentioned in my previous post there are a lot of ways to play the oil market right now. You can short like Richard in the article suggests and ride it out as oil tries to find a bottom, you can buy and hold on for a ride, or you can buy a company that benefits from low oil prices like PPG industries or Goodrich tires. When trading you always have to consider both sides of the equation supply and demand after all this is the fundamental for the stock market. The price of stock is determined by supply and demand of the stock. How many buyers and sellers there are in the market.
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About Shaun Archer Tatum Shaun works in corporate finance in New York City. He has done financial consulting for several start-ups and has worked at several Fortune 500 companies. He has contributed several finance/investing articles on Seeking Alpha which have been published on Yahoo! Finance.