It appears that crude oil prices are starting to stabilize. At least they’ve started to decline slower. Most of the “experts” who send me their price forecasts have the low being set in the $45 to $55 range.
This week we will see the first major winter storm of the season, which should draw more attention to the energy sector. The first “Clipper” of the season will bring heavy snow, high winds and very cold temperatures to an area of the country that burns a lot of natural gas for residential space heating. People in the Northeast still use a lot of heating oil to heat their homes, so this may have some impact on oil demand.
Outlook for 2015
2008 was the last time we saw crude oil prices plunge anything like they have this year. In that year the entire economy went into the tank, which in turn reduced energy demand. This year, it is the slow down in the Asian economies responsible for the International Energy Agency’s cut in their global oil demand forecast. Note that the IEA is still forecasting a significant year-over-year increase in demand.
If what happens next is anything like what happened after 2008, energy sector investors are in for a couple of very good years. 2009 and 2010 were two of the best years for the sector. Anyone that spread their money evenly over a group of high quality upstream companies, drillers and oilfield service firms on January 1, 2009 and rebalanced it quarterly should have doubled their money in two years.
Read the entire OilPrice.com article here.