Top 3 Reasons for Investing in Petroleum Stocks in 2016
Foretelling the stock market movements is not an easy job. While “buy low” is a great advice, how to know if a low stock won’t go even lower? However, if you currently look at the latest petroleum news, there are clear signs that the oil and gas stocks are lucrative as their prices are the lowest since the 90s. Experts suggest that just as real estate was good to invest in during the period between 2009 and 2010, oil and gas are good to invest in right now. Here are some reasons.
1. Supplies are Shrinking
The drop in the oil prices have thrown competitors out of the market, thereby leaving only a few players selling oil. Moreover, dropped oil prices are causing declining oil exploration. Major oil and gas projects are suspended and hence oil production has been cut by 2.9mn barrels per day. Still there are more reports of the declining oil supplies which tallies that there was a cancellation or delaying of an added 356,000 barrels of oil per day last year by OPEC countries. The dwindling oil supply will possibly cause a rise in oil prices and eventually oil stocks in 2016.
2. Low Oil Prices are Giving a Pain to OPEC Countries
OPEC as well as non-OPEC countries are feeling the pain of low oil prices. It’s reported that the OPEC countries were in a hope that the US producers of shale would cut back which would in turn give an increased market share and increased prices to the OPEC countries. This would cause risen oil costs, profits and better performance of oil stocks.
3. There is a Growing Demand of Gasoline
There is a continuous rise in the demand of gasoline. There is a growth of up to 10.5% over the last year same period. So, it is predicted that demand for gasoline will increase over 700,000 barrels per day. Combined with dropping oil production in the US, this rising demand is about to cause increased profits and increased oil stock prices.
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