It may not be as cool as the latest greatest technology breakthrough, but don’t underestimate the power of the new bull market in crude oil.
Clearly, this new bull market is not simply a “Russia thing,” though the Russia thing will certainly add power to the bullish trend already underway.
The supply-demand imbalances in both crude and natural gas were well-entrenched before Russia “changed the math” by invading Ukraine. But now, these imbalances are almost certain to become even more extreme… which is almost certain to continue putting upward pressure on oil prices.
Furthermore, Russian oil will NOT be flowing West again anytime soon, even if the Ukraine conflict ended tomorrow and Putin quit the Kremlin and moved into a retirement home.
Western sanctions are preventing many would-be buyers from going anywhere near it. And even where national laws still allow Russian oil, the stuff is becoming increasingly toxic to corporate reputations.
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It has become “blood oil,” which is why Russian crude is selling at $20 to $30 discounts to Western benchmark crude prices, like Brent crude and West Texas Intermediate crude.
The world is about to lose a significant amount of production from its No. 3 oil producer, Russia. Many folks assume that OPEC nations could easily boost output to satisfy any significant surge in demand. But the early evidence is not very convincing, but the cartel’s total output has tumbled by nearly five million BPD (barrels per day) from its 2018 peak.
And what about electric vehicles? Won’t they cut down on oil demand. Well, yes, but not nearly fast enough to derail what I call the Trade of the Decade…
Unstoppable Potential
In my Trade of the Decade briefing last week, I revealed that I believe oil has the potential for the biggest gains for the next few years.
I urge you to watch the entire briefing to get my complete analysis, but even if you don’t have a few minutes to watch it right now…
You should know that electric vehicles (EVs) are not going to conquer the world anytime soon.
Yes, even though…
- I’m extremely bullish on the battery metals that go into the creation and maintenance of EVs…
- General Motors Co. (GM) just confirmed that there will be an electric version of Corvette in 2023 (okay, that got my interest)…
- Ford Motor Co. (F) is bolstering its F-150 Lightning production…
- And Ram is attempting to steal Ford’s thunder by producing its own electric pickup.
If you drank the Kool-Aid that “electric vehicles are going to make the internal combustion engine obsolete in ten years”…
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You should know a couple of sobering forecasts:
- The U.S. Energy Information Administration says the total number of internal combustion vehicles on the world’s roads will not peak until 2038. That’s 16 years from now!
- Second, because crude demand from other end users will continue growing past that date, the International Energy Agency (IEA) expects worldwide oil demand to be at least 25% higher in 2050 than it is today.
In other words, most conventional, oil-consuming technologies will die a slow death, no matter how rapidly EVs conquer the personal transportation industry.
Back in December, long before Russia declared war on Ukraine and subsequently drove oil and gas prices to never-before-seen highs, I recommended buying the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).
In four short months, XOP has risen 31%.
To put that in perspective, over the same time period, the S&P 500 has lost about 8%.
The option play I recommended on XOP in my trading service, The Speculator, has delivered an even larger gain of more than 150%…so far.
I believe gains like these are just a taste of what the oil sector will deliver over the coming months and years.
Time Is Running Out
Oil is still an indispensable global resource, and taking Russia’s 4.7 million barrels per day of exports off the market is a catalyst that still hasn’t been fully factored into oil stock prices. Not even close.
This reality is why I’ve declared oil the “Trade of the Decade” and believe that many oil stocks could double or triple from their current levels.
But the truth is, not everyone is ready to go full-bullish on oil. Not yet anyway, which makes now still a good time to get in.
That’s why it is so important that you watch my Trade of the Decade presentation, so you can understand the opportunity ahead of us.
By viewing this briefing, you’ll learn…
- Why the Oil Trade of the Decade is so similar to some of my biggest trade recommendations of the past and why now is the perfect time to get in on it…
- How this trade can be massively successful, even if the rest of the market goes nowhere…
- Why my top oil stock recommendations are still incredibly cheap, even after the recent oil rally…
- The name and ticker symbol of one oil recommendation that could benefit tremendously from this situation…
- And much more.
Don’t be the one who missed out. Get the details here, before it’s too late.
Regards,
Eric Fry
Editor, Smart Money
