Oil could easily run to $100. All thanks to years of underinvestment.
In fact, according to Scott Sheffield, CEO of Pioneer Natural Resources, he’s concerned “oil prices could get too high and further roil markets after years of underinvestment in the sector,” as noted by Reuters. “I’m worried that it may get too high, above $100 (per barrel). The Biden administration called up OPEC to increase production and didn’t ask the U.S. to do it.”
Hedge fund manager, Kyle Bass tweeted, “Get ready for explosively higher oil. 7 years of dramatic underinvestment in hydrocarbons fueled by ignorance like this will inevitably generate $100+ crude oil and $5+ prices at the pump for years to come.”
Even Halliburton told Reuters the world could be headed for oil scarcity following years of underinvestment. Plus, we have to consider that SPR has been priced in, too.
JP Morgan says oil could soar to $125 in 2022, and to $150 in 2023.
Unless things change, things could get even rougher at the gas pump. Can you imagine what $125, even $150 oil prices would do to pump prices?
The good news is we can profit from higher oil with ETFs for example, including:
SPDR Energy Select Sector ETF (XLE)
When we first highlighted the XLE, it traded at $52.70. It’s now up to $57.25, and could be headed to $60, near-term. The XLE ETF provides exposure to companies in the oil, gas and consumable fuel, energy equipment and services industries, as noted by State Street SPDR. Not only does an ETF allow for diversification, you can buy it for less.
Invesco DB Oil Fund (DBO)
DBO traded at $13.85 when we first mentioned it. It’s now at $13.35, and could push higher with oil prices. This ETF seeks to track changes, whether positive or negative, in the level of the DBIQ Optimum Yield Crude Oil Index Excess Return plus the interest income from the Fund’s holdings of primarily US Treasury securities and money market income less the Fund’s expenses. It trades WTI crude futures.
iShares Global Energy ETF (IXC)
IXC was at $27. It’s now at $28.70, and could push higher. The iShares Global Energy ETF seeks to track the investment results of an index composed of global equities in the energy sector. Trading at $27, some of its top holdings include Exxon Mobil, Chevron Corporation, BP PLC, Total SA, and EOG Resources.
