Why Oil Companies are a good bet
Below is a summary of a you tube video sent by Zurich – justifying their long term position in Oil Stocks – interesting read!
1. Demand exceeds supply –
75pc usage of oil on transport – and massive shift of people in BRIC countries from lower class to middle class – is seeing them increase their demand for motorbikes and cars – and hence oil (watch out environment!)
2. Producers are more efficient – oil companies are more profitable at $50 than 3 years ago when oil was $85 a barrel
2. USA now supplying as much oil as Saudi Arabia, whose markets are now threatened – they reduced prices to get USA companies out the market – but this didn’t work – USA companies actually came to the party and increased production .
3. There are many factors that will potentially make oil price go back to $100 per barrel and more ! Political instability, government intervention, scarcity to name a few
Short term oil price – low
Long term – they think will increase