Investing Blog

Oil is the most in-demand commodity today. Each and every day, 82 million barrels of oil is pumped and virtually all of it finds a buyer on the same day. About 80million barrels is normal crude oil, traded on the markets at the current prices. The other 2 million is a mix of heavy Saudi Crudes that have very few uses in industry.

When supply takes a cut to 81 Million barrels, only 1.25% of the oil supply is lost but often the price trends upward 3-4%. We will pay almost any amount for a supply of oil, and this is certainly reflected in the price when supply is tightened.

Oil is a very seasonal commodity peaking in every US summer driving season and reaching 52week lows during the long winter months. The United States is accountable for 5% of the world’s population but 25% of the use of crude oil. Slow winter travel drops the demand for crude and keeps prices low, which is usually offset by controls set by OPEC.

As developing nations thrive they require the use of more and more energy or oil. Countries such as China and India are leading the way in oil consumption growth that is growing with their emerging middle classes. As 2 billion people begin to take the wheel, oil consumption will go skyhigh taking prices with it.

The best investment you can make is in the growth of the middle class, or in oil. Oil is not only a good investment in world growth but also in asset protection from falling currencies, and leveraging your investment dollars. As demand for oil grows, expect the price of oil to outpace it by 200-300%.

I would suggest investing in smaller, regional oil companies that are not as prone to “sticker shock” stock prices like Exxon Mobil.

Futures and Commodities oil