When OPEC+ cut output in March, oil stocks rebounded, only to give up gains. OPEC+ announced a fresh supply output cut for July. It then announced another cut.
Energy investors should expect oil prices to firm up from here. Prices should hold the $75 per barrel level in the next three months. Within six months, expect prices in the $80 range or higher. OPEC+ is disciplined in limiting output. It will ease supply to prevent a collapse in oil prices.
Russia is outputting record volumes of oil. Iran, India, and especially China are buying oil at a steep discount. The price discount and supply increase is hurting oil markets.
Investors may consider exchange-traded funds like US Oil (USO) for exposure to the energy market. Broad spectrum energy funds worth considering include Energy Select SPDR Fund (XLE), Vanguard Energy ETF (VDE), and VanEck Oil Services (OIH).
Exxon (XOM) is a highly profitable energy firm to consider. Now that the US. The government will stop releasing oil through SPR, oil prices will increase. U.S. domestic travel is at record levels. There is no demand destruction currently playing out that will hurt oil stocks from here.
Saudi Arabia will stand by its cut this time. Public scrutiny is very high. This suggests that now is the time to start a position in the energy sector.
