Oil Stocks


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  • #30546

    Hi Paul,

    What are your thoughts on how the oil sector will do in the coming months? I am really liking the action of oil prices creeping higher off a solid base and am really thinking this industry will do quite well over the next few years. Do you share that sentiment? If so, what individual stocks are you most interested in?



    TS Paul

    I invested a disproportionate amount in the oil sector a few years ago after oil prices fell off a cliff. Now that they have recovered I have been moving towards bringing those investments back down.

    But I’m not in a rush. The biggest factor I see is the impending IPO of Saudi Aramco. To maximize the IPO sale, oil prices need to be high. And nobody is in a better position to move oil prices higher than Saudi Arabia.

    Plans right now appear to be for the company to go public on the Saudi stock exchange in the second half of 2018, and to be listed internationally in the US or the UK sometime in 2019. I think we will see efforts to prop up oil prices through that IPO.

    Longer term, the easy on/off of US shale production has really put a cap on how high oil prices can go. Anytime prices move above breakeven for shale producers, they start pumping and prices will fall again.

    Right now I own ConocoPhillips and Chevron on the production side, and Magellan Midstream and Enbridge on the infrastructure side. Those are all older investments and I haven’t thought at all about whether those are what I would buy if I was buying today, and in fact I might be more inclined to play oil prices with a sector ETF rather than individual stocks.

    The TSP Allocation Guide www.TSPallocation.com

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