{"id":104437,"date":"2017-04-06T10:37:20","date_gmt":"2017-04-06T14:37:20","guid":{"rendered":"http:\/\/countingpips.com\/?p=104437"},"modified":"2017-04-06T06:37:48","modified_gmt":"2017-04-06T10:37:48","slug":"prepare-for-a-sudden-rebound-in-oil-prices","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/04\/prepare-for-a-sudden-rebound-in-oil-prices\/","title":{"rendered":"Prepare for a Sudden Rebound in Oil Prices"},"content":{"rendered":"
April 6, 2017<\/div>
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By WallStreetDaily.com<\/u><\/a> \"Prepare<\/p>\n

\"LouisThere\u2019s no question that it\u2019s been a tough time to be an oil investor.<\/p>\n

After hitting $112 in 2014, prices dropped to $26.21 in 2016 \u2014 a 76% decline.<\/p>\n

Then, after prices nearly doubled last year, light sweet crude has fallen 9% in 2017.<\/p>\n

The seesaw action has wreaked havoc on the resolve of oil bulls. And the prospect of U.S.-based frackers flooding the market with oil again could weigh down prices even more.<\/p>\n

But if OPEC\u2019s recent agreement to hold down production in an effort to reduce oversupply sticks, there\u2019s a lot more upside ahead.<\/p>

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Senior analyst Jonathan Rodriguez provides the perfect way to profit from the momentum.<\/p>\n

Ahead of the tape,<\/p>\n

Louis Basenese
\nChief Investment Strategist, Wall Street Daily<\/i><\/p>\n

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Don\u2019t Buy the Hype\u2026 Oil is on the Upswing<\/h2>\n

\"JonathanOil\u2019s had a rough ride over the last three years. But the market is providing one of the best opportunities in history to establish a position.<\/p>\n

Why?<\/p>\n

The war waged between the Saudi Arabian-led OPEC and U.S. frackers may soon be over.<\/p>\n

As you likely know, in an effort to starve out low-cost shale drillers that were gobbling up market share, OPEC revved up production to record-breaking highs.<\/p>\n

This drove prices from more than $100 a barrel to less than $30 \u2014 a multidecade low.<\/p>\n

And for the last three years, the world has been overrun with far more oil than it needs.<\/p>\n

At the end of 2016, global oil production hit 98.3 million barrels a day (mb\/d), according to the International Energy Agency.<\/p>\n

Worldwide demand, on the other hand, came in at 97.9 mb\/d.<\/p>\n

At present, the world is still oversupplied by about half a million barrels a day.<\/p>\n

But starting in January, OPEC \u2014 the cartel of 13 oil-producing nations \u2014 finally agreed to curb oil production by nearly 2 million barrels a day through mid-2017.<\/p>\n

And so far, OPEC has registered a 90%-plus compliance from member nations.<\/p>\n

The production cut helped boost the price of West Texas Intermediate crude as much as 20% since November.<\/p>\n

All of this is leading to a supply-demand balance that could happen as soon as this year.<\/p>\n

In fact, the U.S. Energy Information Administration forecasts a 2018 average price of $56 a barrel.<\/p>\n

That implies upside of about 11% from current prices.<\/p>\n

Here\u2019s how you can cash in on the biggest returns\u2026<\/p>\n

Correlate and Dominate<\/h2>\n

As you might imagine, the safest play on oil would be diversified, mature large-cap oil firms.<\/p>\n

Indeed, income investors have come to love the (usually) steady flow of oil dividends.<\/p>\n

But because of their size, these firms are slow to react to sudden spikes in oil prices.<\/p>\n

However, small-cap firms are far more nimble and enjoy a much larger bounce when crude prices rise.<\/p>\n

In fact, many shale drillers \u2014 which can be profitable with oil as low as $50\/barrel \u2014 are included in this group.<\/p>\n

And the PowerShares S&P SmallCap Energy Port ETF (PSCE) tracks some of the strongest small-cap energy firms in the U.S.<\/p>\n

Over the last year, PSCE has gained 23%, versus a 14% gain for XLE \u2014 the ETF that tracks large-cap energy names.<\/p>\n

In fact, since oil bottomed in early 2016, PSCE has gained 65%. That\u2019s more than twice the gain of large-cap energy stocks over the same time frame.<\/p>\n

While both ETFs enjoy a strong correlation to the price of crude, PSCE provides traders with a bigger bang for their oil buck.<\/p>\n

Of course, this also means that PSCE is more volatile than XLE. But traders are well compensated with capital gains for the added risk \u2014 and stand to profit in a big way as oil recovers.<\/p>\n

Better yet, if Trump follows through on his plans to break the regulatory shackles on offshore drilling, small-cap firms will benefit even more.<\/p>\n

Bottom line: Make no mistake, oil is roaring back to life. And the biggest gains will go to the smallest, most agile companies. PSCE provides diversified exposure to some of the highest-quality small-cap firms of the bunch.<\/p>\n

On the hunt,<\/p>\n

Jonathan Rodriguez
\nSenior Analyst, Wall Street Daily <\/i><\/p>\n

The post Prepare for a Sudden Rebound in Oil Prices<\/a> appeared first on Wall Street Daily<\/a>.<\/p>\n

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 <\/p>\n","protected":false},"excerpt":{"rendered":"

By WallStreetDaily.com There\u2019s no question that it\u2019s been a tough time to be an oil investor. After hitting $112 in 2014, prices dropped to $26.21 in 2016 \u2014 a 76% decline. Then, after prices nearly doubled last year, light sweet crude has fallen 9% in 2017. The seesaw action has wreaked havoc on the resolve […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-104437","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/104437","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=104437"}],"version-history":[{"count":3,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/104437\/revisions"}],"predecessor-version":[{"id":104447,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/104437\/revisions\/104447"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=104437"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=104437"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=104437"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}