Considering that OPEC can reduce production, US shale firms going bankrupt, and possible increase in demand down the line, is this a good time to invest in oil? Or is this recovery temporary before it goes down again? Thoughts?
i wouldn't iran just had sanctions lifted- 2.3 mil barrel output and another 500,000 barrels are going into supply a day
6mo futures have it rising by $10 and i'd say that's pretty reasonable
Here is a little secret for my oil interested /biz/raelis:
Count up the cumulative volume of contracts traded in the last leg down to the $27 handle in WTI.
Now start offsetting it by counting the volume since that last low. When the volume from the low to the $27 handle is getting near 80% of the volume down to it, I'd suggest you get ready to hold on to your ass. The volatility will be forthcoming. You're welcome.
I'd wait until summer time to start investing heavily in oil stocks. Let things shake out and see what happens. Right now it's nothing but downside and most people on /biz/ can't handle any drops without shitting themselves in panic.
Given the cuts to capex combined with the re-balancing of shale producers in the US and the near complete shut down of the Canadian oil patch it is not unreasonable to expect to see at $60 - $80/b in the next five years. There is another component of this that requires deeper discussion and that is of the political risk as it pertains to potential conflict within Saudi Arabia and or between Iran and Saudi Arabia. This is a very real risk and is not currently being priced into the current market price.
Finally, many will say higher prices will bring US and Canadian producers back on line. However, once off line and having been subjected to an extended period of little or no capital expenditures this infrastructure will not come back on line quickly.
It's an old trick from the "turtle" days. After a swing move, you look at how many contracts were traded in that move. Then you wait until an equal number of contracts have traded after (in this case) the low was made. So, if it took a bazillion cumulative contracts to get to $27 handle for WTI, you would watch the contracts traded AFTERWARD as they grow to near a bazillion traded. The thought is that all the down-move contracts have to be bought back somehow. At that time the shit is on the launch pad aimed toward the fan. There is another old trick associated with this form of analysis but my mind is distracted by the recent adventures of Johnny Manziel and I wonder if Jerry Jones is being force-tranquilized by his son Stevie.