I typically am the person people close to me go to for stock advice. Stocks are fairly easy to predict the next 12 month trajectory – oil on the other hand is a commodity and therefore is not able to like a stock be looked at using a P/E ratio (one of the best to determine how to trade a stock). Is now the time for people to pile into investing in oil? Or should we not touch oil due to the high probability of a recession in 2023?
Reasons to not trade oil over the next 1 year:
– Winter was supposedly going to be horrible in many European countries (we all have seen that 2 minute video from Russia trying to show Europe freezing over in the winter) and oil was supposed to soar … That is not the case anymore (https://www.upi.com/Top_News/World-News/2022/10/26/eu-natgas-storage-rystad-ttf/1691666803260/) as oil reserves have been filled and everything should be fine.
– Speaking more long term oil really is just not going to be around decades from now, and even if this is wrong much more money can be made in other investments
Reasons to trade oil over the next 1 year:
– If there seems to be something wrong with the price of oil it is slapping me in the face right now and that is the following: WTI Jan. 23 as of 1:30pm = $70.33… Look at any 10 year (https://www.macrotrends.net/2516/wti-crude-oil-prices-10-year-daily-chart) or 5 year chart and you will quickly see oil's average over 10 years or 5 years is above what it is currently trading at.
Bottom line: I will be buying up oil stocks and will dip my toes into ETFs including USO and OILU (OILU is a leveraged oil futures ETF) if and only if oil dips below $65 in the coming 2 weeks. I believe we will have a global recession and will try to swing trade oil stocks/ETFs before a potential massive dip takes place. I do see even with oil reserves in Europe being full right now a steady rise in oil prices in the west over the next 3 months, hopefully timed before any sort of broader market slide.
Leave a Reply