Oil prices remain one of the top concerns for traders as the commodity's dramatic fall from over $100 per barrel to less than $50 in the space of a year has presented an interesting investment opportunity.
Most expect crude prices to recover eventually, but the big question on the market's mind is whether or not things will get worse before getting better.
A Delicate Balance
On Friday, a report from the International Energy Administration said the global supply glut is likely to continue growing as production in the U.S. remains constant.
The IEA also cautioned that the U.S. crude storage facilities are nearing their capacity, something that could soon add more pressure to the commodity's prices.
However, a lack of storage options may cause U.S. producers to scale back their output in the second half of 2015, something that would be positive for prices.
Where's The Bottom?
Analysts are struggling to come to a consensus on where oil prices are heading, but many say there could be further to fall. Raoul Pal wrote in the Global Macro Investor Newsletter that he sees prices falling as low as $20 before bottoming out.
Pal cautioned that a rising dollar coupled with weak demand from Europe and Asia is likely to pull prices lower and may even push the U.S. into a recession by the end of the year.
Bargain Hunters
Worries that oil hasn't finished its fall yet haven't kept investors from looking for ways to snap up a good deal in the energy sector.
Private equity firms are getting more and more interested in oil assets as they have become relatively cheap; Blackstone Group LP BX recently launched a $4.5 billion energy fund, saying it was planning to "take full advantage of the significant recent cyclical downturn in oil and gas prices."
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