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  • Oil Stocks

    Hi Guys

    Time to liven this site up a bit.

    Came across this piece of news while looking at one of my usual sites:

    We continue, however, to recommend that our readers increase their exposure to oil companies with significant reserves (Chinese oil companies don't have large reserves) and to oil servicing companies, as the fundamentals of the oil industry are compelling.

    Asia, with 3.6 billion people or 56% of the world's population consumes less oil than the US with 285 million people. Based on recent trends in oil demand in Asia and given the positive growth prospects for Asia, I would expect Asian daily oil consumption to double from about 20 million barrels to anywhere between 35 million to 50 million barrels in the next ten years or so.

    Since current oil production is running at 78 million barrels per day and can due to declining reserves in non-OPEC countries unlikely be increased much, I would expect prices to harden significantly.

    In fact, I would not rule out another oil crisis should as a result of some political upheaval in the Middle East supplies be interrupted. Moreover, whereas the NASDAQ seems pricey, to put it mildly, oil companies command very undemanding valuations.

    In sum, rising energy prices will lead to higher inflation and higher interest rates. A stronger dollar may hurt some big players who are short dollars and lead to less buying of US treasuries by Asian central banks and so depress the bond market.

    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx