By Justin Spittler, editor, Casey Daily Dispatch
Get ready for $100 oil.
Investors aren’t used to hearing this. That’s because it’s been four years since oil’s traded above $100.
Not only that, but many “experts” have said that we’d never see $100 oil again. But those analysts could soon eat their words.
Just look at this chart of oil:
You can see that the price of oil’s up 71% over the past year.
That’s an enormous move. But oil’s likely headed even higher. I’ll tell you why in a second. I’ll also show you the best way to cash in on higher oil prices.
But let us first look at why oil’s rising.
• Donald Trump is trying to bury Iran’s oil industry…
If you’ve been following the news, you know exactly what I mean. If not, I’ll bring you up to speed.
In short, Trump is trying to impose major economic sanctions on Iran. Specifically, he wants the United States to stop importing Iranian oil by November.
Trump wants America’s allies to do the same—and he might get his way.
You see, the White House wants to deny access to the U.S. financial system for anyone who deals with Iran. So countries that don’t play ball with Trump wouldn’t be able to do business with the U.S.
In short, Trump might get his way. And that’s a huge deal.
• Iran is a major player in the global oil market…
Last year, it pumped 4.5 million barrels of oil per day. That makes it the world’s fifth-biggest oil producer.
So taking Iran out of the equation could seriously disrupt the global oil supply.
But don’t just take my word for it.
Morgan Stanley thinks so, too. In fact, it recently said sanctions could cause Iran’s oil production to fall by 1.1 million barrels per day (bpd). That would cause the global oil market to be undersupplied by about 600,000 bpd in the second half of this year.
Because of this, Morgan Stanley just lifted its oil price target. The bank now expects oil to average $85 per barrel in the back half of this year. That’s 9% higher than the current price.
• Bank of America Merrill Lynch expects oil to spike even higher…
In fact, its head of commodities and derivatives thinks oil could surge 20–25% from here.
This means oil could soon flirt with $100 per barrel. Again, that hasn’t happened in four years.
Now, this is bad news for many everyday Americans. It means they’ll end up paying a lot more at the pump.
But a huge oil price spike would be great for oil companies.
• It would be especially good for oil services stocks…
These companies sell machinery and equipment to oil producers. They also provide services like seismic testing and rig transportation.
You can think of them as the “picks and shovels” companies of the oil industry. But these companies are highly sensitive to the price of oil.
And for good reason. When the price of oil is low, producers make less money. That leads them to drill fewer holes… pump less oil… and buy less equipment and machinery.
Because of this, oil services stocks usually track oil very closely… but not lately.
You can see what I mean below. This chart compares the oil price with the VanEck Vectors Oil Services ETF (OIH), a fund that invests in 25 oil services stocks.
You can see that oil’s up 16% since the start of the year. And yet, OIH is only up 3% on the year.
This is an anomaly. But I don’t expect oil services stocks to lag oil much longer.
• Remember, oil is trading 40% higher than it was a year ago…
Because of this, energy companies are making more money.
Soon, other investors will realize this. After all, research firm FactSet expects U.S. energy companies to show a 142% spike in profits once second-quarter results are tallied.
And that should trigger a huge rally in energy stocks… especially oil services stocks, which have a lot more “catching up to do” than most energy stocks.
So consider speculating on oil services stocks if you haven’t yet. You can easily do this with OIH.
Just understand that energy stocks, like other commodity plays, can be highly volatile. Don’t “bet the farm”… And consider trimming your positions once you’re sitting on big profits.
July 10, 2018
P.S. Strategic Investor editor E.B. Tucker also sees a huge opportunity to buy oil stocks today.
And he just discovered something that no one else is talking about right now. In short, there’s a tiny clause buried in the new tax bill that could unlock a $460 billion fortune for everyday Americans.
It’s gone completely unnoticed by the mainstream media. Your accountant probably skipped right over it, too. But this clause—located on page 553—could send three specific oil stocks through the roof. To learn more about this opportunity—and how to access these three names—click here.
Today, a reader responds to our recent interview with Doug Casey on banking with the fed…
Should we abolish the Fed? The answer is yes. The Fed uses data gleaned from online digital transactions to invade privacy and for their own benefit. The government should serve the people, not use the people. We should go back to silver and gold and banks should be free from political forces.
And a couple more have great things to say about Doug’s new, controversial book—Totally Incorrect Volume 2:
I am so glad Doug has offered this! I look forward to meeting Doug at La Estancia de Cafayate in March of next year. Thanks to Doug and his entire team. Great job.
Your book Totally Incorrect Volume 2 is awesome! I hate to use such a worn out word, but it suffices.
This is Doug’s most controversial book yet… and readers continue to write in and tell us how much they’re enjoying it. Not only is it filled with Doug’s unfiltered insights… but this book is a vital guide to surviving the changes happening in America today… as well as a road map for where they’ll take us. Learn how you can claim your copy right here.
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World-renowned cryptocurrency expert Teeka Tiwari and media personality Glenn Beck have a big announcement…
They’re hosting a live event on July 19, during which Teeka will reveal three FREE cryptocurrency recommendations.
You’ll also learn how you can claim a share of the $2 million bitcoin giveaway.