Contrarian Investors Eye Up Oil

The past year has seen millions of dollars lost on oil and gas investments as investors sold off to avoid the sector's prolonged downturn. The result has left shares of big name firms down in the dumps, prompting contrarian investors to wonder if there are any deals to be had. However, with the market still fluctuating and uncertainty creating a great deal of risk, many wonder if returning to oil right now is a good bet.

Slight Price Increase

Bargain hunters have returned to oil stocks in recent days after indications that producers may begin to coordinate efforts to increase prices and worries about China's economy were moved to the back-burner. On Tuesday, prices rose slightly, but analysts say they expect the gains to be short-lived as concerns about oversupply return.

Related Link: Oil Traders Take Profits As OPEC Lowers Production Projections

Gloomy Forecast

The International Energy Agency has said it sees oversupply continuing in 2016 as Iranian oil returns to the market and demand growth remains weak. Producers from outside OPEC are expected to cut back in the coming year to cope with lower prices, but the removal of sanctions on Iran's oil will likely continue to support the global supply glut.

Where To Find A Deal

Despite all of the bad news, some investors are looking to pick up oil and gas stocks at deep discounts in hopes that prices will stabilize in the longer term. BP BP has been a popular option as the firm says it will be able to cope with falling prices by cutting costs and increasing efficiency. Over the past month the company's stock price has risen 14 percent.

Others are looking to ONEOK Inc. OKE, which operates natural gas pipelines. Over the past year, OKE shares have lost nearly 34 percent, but contrarian investors have seen the lower price as a bargain, which has pushed shares up 10 percent over the past month.