Why It Is Lucrative to Trade Oil Stocks at Present

canstockphoto8281022Whether it is oil or gold, it is not a child’s play to forecast the price fluctuations in the stock market. It is logical to buy at a low price and then sell it when it price rises. However, how can one rationally judge whether a low stock will go further lower or not? Well, you need not be so greedy in this regard because if the price suddenly tends to rise, you may lose your lucrative opportunity.

In case of low oil stocks, many experts are suggesting to buy them now, as the prices are at the lowest level since the past decade. As published by CNBC this August, crude oil prices are finally going to rise up to $65. This itself means it is the right time to invest in a few oil stocks.

Even Bank of America Merrill Lynch asked their customers to invest in energy stocks, as it is forecasting an oil price hike by up to 46% by June 2017, raising the price to almost $69 per barrel.

Keeping these facts in mind and the investment fundamentals, it is sensible to take a decision of investing in low-selling oil stocks, which are likely to go up.

What else an investor should keep in mind is that commodity prices are significantly determined by the supply and demand. With ample of supply, the prices drop and with a shortage or fall in supply, the prices rise. Well, this also explains a bit of what made the oil stock prices to fall.

According to the New York Times, the American domestic oil production has increased by two-fold in the past few years.  This is favorable for the consumers, as the increased supply means low prices and consequently more savings as well as usage.

This had a big impact across the globe. Other countries such as Saudi Arabia, Russia, and Algeria have started losing their consumers and they are looking for more revenue sources in other continents.

With the falling demand in these regions, the producers formerly making excellent profits are now forced to reduce production, including a closure of over 65% oil production rigs. Thus, several corporate bankruptcies have taken place.

Despite this profit loss and fall in oil prices, a good hope prevails considering the historical data. Such an oil price fall was seen in 1986 after which the oil prices did increase.

Now, the experts believe that history will repeat itself once again. Obviously, the comeback or hike might not be an astonishing one like $120 per barrel. As per the report of the recent research by the International Energy Agency (IEA), oil demand will be at its height at 96.5 barrels each day during the latter period of 2016. Thus, supply and demand shall reach a state of equilibrium, whichshould push the oil prices upward.

Even the production fromOrganization of the Petroleum Exporting Countries (OPEC)is sluggish and that the supply of oil from the other parts of the world is declining in response to low returns. So, in near future, the supply will be short and demand will be high – paving the way to a significant price hike!

So, it is wise to trade oil online now!