Join more than 165,000 subscribers and keep yourself informed with the latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
You are now subscribed
Your newsletter sign-up was successful
Want to add more newsletters?
An account already exists for this email address, please log in.
The oil price just keeps falling: is it time to buy?
It's been a terrible year so far for the oil price. Now, analysts are predicting $20 a barrel. John Stepek asks if it's time for a contrarian punt.
The oil price has fallen by more than 15% this year alone
Today, I wanted to take another look at what's going on with the oil price.
It's been a terrible start to the year for anyone who sells oil, and a rather better one for anyone who uses a fair bit of the stuff. The price has fallen by more than 15% this year alone, down to near $30 a barrel.
And analysts who not so long ago believed that oil could never go below $100 a barrel again are now lining up to predict oil at $20 a barrel.
Try 6 free issues of MoneyWeek today
Get unparalleled financial insight, analysis and expert opinion you can profit from.
Sign up for MoneyWeek’s free twice-daily newsletter.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
The price of Brent crude slid to below $32 a barrel yesterday. Morgan Stanley suggested that it could fall into the $20s which when you think about it, is hardly radical given that $29 is only a couple of bucks away.
It's far from being the only investment bank to call for $20 oil. And hedge funds who are rarely as "smart" as their investors wish they were now have near-record levels of short bets against the oil price. BP and Shell are at their lowest levels since pretty much the 2008 financial crisis.
And there are any number of things that could turn the oil price around. Oil cartel Opec could decide to stop pumping. "Tension" in the Middle East could turn into something even worse than normal. It wouldn't be the first time that oil has seen a "V-shaped" recovery.
Yet the horrible reality is that this doesn't yet "feel" like a sector that's seen the worst.
We need to see a biggie go bust. We need to see some proper capitulation-level carnage going on. At the very least some dividend cuts.
I'll be keeping a close eye on the sector, but I don't think it's time to pile in yet. My colleague David C Stevenson wrote about the one energy investment trust he'd consider buying right now in the most recent issue of MoneyWeek magazine. You can see the piece here.
Join more than 165,000 subscribers and keep yourself informed with the latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
