Oil, What’s Happening?

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It is no secret that of things like how Wayne Gretzky is the best hockey player of all time, Warren Buffet is considered to be a pretty good investor, and there is always exceptional uncertainty in the energy market. Oil/Natural gas, which falls front and center in the energy market has extreme uncertainty at all times talking strictly from it as an investment. And has seen many ups and downs, especially over the past four years where it has taken oil futures up over a hundred with companies like Exon and Chevron skyrocketing. Then eventually back down into the 60s. But now with oil futures making a little pushback up at around mid to high 70s, so what gives man? Is it on that upward trajectory, are there any pipelines exploding, a prince in the Middle East who wants to drive up prices, or anything really at all, and how can one get in on that (in your own responsible financial way that has your own extensive research as I am just sharing an opinion.)

Well to start let’s set down what has been happening so far this year quickly, how that’s affected everything, and what a game plan may look like.

And to start the most recent fluctuations have been due to some recent global tension leading to ups and downs of this already volatile commodity. Tension in the Middle East mainly due to the war happening in Israel combined with a recent Indian tanker blown up by Yemen has not driven prices down. But then you take into consideration that the Fed’s potential decision over rate cuts is also having a major effect on what could happen with oil futures and related stocks with a most recent drop because of it.

But as one looking to see whether or not right now is a good time to enter something like the energy sector, ETF XLE, Exxon Mobil (XOM), or Chevron (CVX). It is hard to say but generally, if you think a company is good and below its trading value then the price or other factors don’t matter. But because of the major factor oil has on the world economy, it is hard to look past how volatile it can be and also which seasons it tends to go up and down.

But the more interesting aspect to think about is how oil, the election, and the wars are all going to be going over the next year. This is because obviously over the next year you want to try and keep oil prices down for the election, but also the combination of dealing with outside tension is an interesting aspect to think about.

But if I were to sum up this mess I would generally say that oil is always going to continue to be volatile especially now with all the political and federal aspects happening right now. But that doesn’t mean there isn’t value to be found and potential opportunities to swing, but it is unlikely we will see a big climb like we saw a couple of years ago, and if there is a big climb it is most likely post-election. But like anything, whatever you are looking for whether it’s a good dividend, value, or swing in the sector, I would enter the oil and natural gas market with caution.