How to make money on low oil prices

Corey Goldman. It can also push their stock price down as well. Oil share prices had dipped more recently as U. Your Money. Mavens on TheStreet. Mish Talk — Global Economic Trends.

Don’t get used to it

Over the last two and a half years, the oil industry has experienced its pricss downturn since at least the s. If history is any guide, after every oil bust comes a recovery, if not a boom. But this time a recovery has been tentative, at best. That confidence was shaken by a price dip in early March, but most experts say they think oil and gasoline prices will recover during the heavy driving season in the summer. Wide swings are possible, if not probable. Political and economic upheaval in a major oil-producing country like Venezuela could cause a noney spike.

Funds for playing the recovery

New here? You may want updates via email or RSS feed. Thanks for visiting! Have you been enjoying the sharply-reduced cost of gasoline this year? You are probably right. Oil prices are notoriously cyclical, what goes up tends to go down, and vice versa. The good news is there are ways to capitalize on the cyclical nature of oil prices and make the benefits of lower prices last longer.

The slide in the cost of a barrel of oil could be good news for investors looking for a contrary position

Over the last two and a half years, the oil industry has experienced its deepest downturn since at least the s. If history is any guide, after every oil bust comes a recovery, if loa a boom. But this time a recovery has been tentative, at best. That confidence was shaken by a price dip in early March, but most experts say they think oil and gasoline prices will recover during the heavy driving season in the summer. Wide swings are possible, if not probable.

Political and economic upheaval in a major oil-producing country like Venezuela could cause a price spike. First and foremost, oil companies, their employees and shareholders are winners as oil and gasoline prices rise. Producing states like Alaska, Louisiana, North Dakota, Oklahoma and Texasalso benefit because employment and tax revenues rise.

Higher prices also mean more activity in the oil fields, which helps local businesses such as mom-and-pop services companies, construction firms that build housing, and truck dealerships. And, of course, producing countries benefit, like Nigeria, Russia,Saudi Arabia and Venezuela — all of which have been pressed financially in recent years. For the Saudis, there is an additional advantage: Higher oil prices make its state oil moneyy, Saudi Aramco, more valuable for the initial public offering it has planned for later llow year.

There is also a potential benefit for the environment. Higher oil and gasoline prices encourage consumers to buy smaller vehicles and limit driving. Consumers of gasoline, diesel fuel and heating oil are losers, and those with lower incomes in the United States and abroad are affected disproportionately because fuel costs eat up a larger share of their earnings.

But current oil and gasoline prices are roughly in balance, representing good economic news over all. They are high enough to help struggling states and countries, but not so high as to cause inordinate pain to consumers. Oil prices remain half what they were in the middle of Nevertheless, a price shock — either up or down — could come at any time.

We may soon find. OPEC members how to make money on low oil prices nearly 40 percent of the global oil supply, so the group can be a force when united. After following a policy of record-breaking production to build and protect markets, how to make money on low oil prices in Asia, and to undercut ptices producing from shale and oil-sand deposits, the Saudis bent under the pressure of low oil prices. In November, the cartel agreed to limit production for six months starting in Saudi Arabia alone agreed to cut production by roughlybarrels a day, or about 5 percent of its output.

That means an additional reduction of more thanbarrels ob day. OPEC then announced in May that it would cut oil production for longer than plannedagreeing to lower production levels through March Russia has said it will do the.

Several OPEC members that have undermined past accords, particularly Venezuela, are in no position to increase production significantly, making the new agreement more solid. Related: Interactive Graphic How the U. Oil industry executives are generally overjoyed by Donald J. He supports industry efforts to build more pipelines, including the Keystone XL, which would deliver Canadian heavy oil to Gulf of Mexico refineries, and to open up more federal lands and deepwater prospects for drilling.

He also says he would like to lower regulatory burdens on the industry and has expressed little sympathy for the international Paris climate accord, which aimed to lower global dependence on fossil fuels. All of those policies, if enacted, would increase oil and natural gas supplies on domestic and international markets — potentially lowering prices.

On the other pprices, any move by Mr. Trump to reinstitute sanctions lifted in the multilateral nuclear accord with Tehran could constrict Iranian exports. Since Iran has once again become a major exporter, that could mean hundreds of thousands of fewer barrels mwke day on the world market, lifting prices. Please upgrade your browser. See next articles. Restaurants, hotels and retail outlets can be hurt when consumers have less to spend.

What Americans are doing with money saved from low oil, gas prices

The bigger “savings” picture

A futures contract gives you the right to buy oil at a preset price on a predetermined date in the future. Omney Estate. If you cannot handle makd kind of possible risk, you can buy the index instead. A direct investment in oil involved buying a contract in the current or future market. It requires you to put down a lot of money up. Bet against the Bank of England raising interest rates Lower oil prices will help to keep a lid on inflation and reduce the need how to make money on low oil prices the Bank of England to increase interest rates before the General Election. Below are our seven top picksstarting with the biggest producers, followed by smaller oil drillers and other players in the energy patch, such as refiners and gas-pipeline stocks. Despite those defensive moves, the fund lost It controls Valero Energy Partners VLPa master limited partnership that owns pipelines as well as storage and logistics businesses. Corey Goldman. These two factors are very important.