Oil As a Strategic Long Holding
Here are some reasons why I think that the Energy sector and Oil is still an excellent long-term investment theme for some time to come, with a couple of short-term drivers to drive oil-related commodity and share prices to boot...
1. Seasonal Effect - US Gasoline Prices Break Out For Summer (Driving Season)
Source: St. Louis Fed, Bloomberg
Energy: The Long-Term View
2. Long-Term Oil Driver: Consumption Growth from China, India etc.
3. So far, Non-OPEC (North America) Production Growth Has Kept Up
4. But Will Be Tough to Keep Up With Demand...
Energy: Short-Term Risks
5. Iraq, already OPEC's 2nd-Largest Producer, Is Forecast Huge Production Growth
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6. With ISIS Advances, Iraqi Civilian Deaths Now Highest Since 2007
Investment Conclusions
7. Buy US Integrated Oil, Oil Services, MLP Stocks on Weakness
(JPMorgan MLP ETF: US code AMJ;
iShares Oil Equipment & Services ETF: US code IEZ)
8. Buy US Oil, LNG Shipping On US Export Growth
(Guggenheim Shipping ETF: US code SEA;
Teekay Corp. (US code: TK)
Summary
- The Oil Sector Remains A Key Long-Term Investment Theme
- World energy demand to grow fast
- Short-Term: Geopolitical Risks to OPEC Oil Production (Iraq)
- US, European Oil Stocks to Continue to Outperform
- The PowerShares DB Commodity Index ETF (US code DBC) one way to play higher Brent crude oil, gasoline prices.
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