While guests on CNBS CNBC and Bloomberg are busy encouraging you to buy oil names which are down over 50%, I wouldn't expect to reap any big rewards any time soon. In fact I believe there will be much more pain ahead, depending on the strength of the company you chose. Iran sanctions may be giving it a boost near term but once they're lifted (or eased) their production is expected to double which is once again, bearish for this oversupplied market
While everyone is in agreement that crude oil is in a bear market, quite often one strategy is to buy the laggard and anticipate it to outperform the following year. The trouble with crude oil however, are the fundamentals.
- U.S. consumer Demand (figure 1) Consumption has been dropping since 2000 thanks to more fuel efficient autos and younger Americans (millennials born from 1980 to early 2000s) being drawn to work in and the lifestyles of large metropolitan areas. Baby boomers (born 1946-1964 or 51-69 years of age) will contribute