Investing in Oil as the Prices Continue To Fall

[Posted on February 17th, 2015 by Michael L. F. Slavin]

 

In the wake of the recent drop in gas prices, many consumers and businesses worldwide have been affected.  Many investors are concerned about investments made in the oil industry as prices continue to fall.  But according to experts, despite the decrease in oil prices within the past six months, there are still some investment opportunities available for investors still hoping to invest in the crude oil and gas industry.  To address some concerns that many investors have about whether or not to move forward with oil investing activities, the following is what experts project about the industry and current investment opportunities.

According to a recent online report provided by money.usnews.com it is projected that the U.S. shale drilling will remain profitable, which is estimated to remain at $75, and is also the estimated oil floor price. Additionally, there is an estimated growth in oil investing and the US onshore market, which is projected to continue at its current price. However, as prices continue to decline, there is a growing uncertainty concerning the oil prices as per an analysis report prepared by the US Energy and Information Administration (EIA.)

The Impact of the Drop in Oil Prices

As the supply and demand for oil continues to shift, the price of oil continues to decrease, as supply is far greater than the demand.  The drop in oil prices has resulted in an increase in disposable income for many consumers around the globe as they enjoy the relief from exceptionally high prices at the gas pump.

Also experiencing a relief in high fuel costs are industries that rely heavily on oil to provide services to their customers, such as the airline industry, shipping companies and other transportation companies. They are also experiencing an increase in their gross profit margins.

Although there has been a decrease by 60% in the price of oil in recent months, lenders such as Wells Fargo continues to experience a steady increase. For example they went from $690 million that was generated in 2011 to $1.04 billion that was generated in the year of 2013.  Additionally Wells Fargo may take advantage the current situation by getting involved in re-capitalizing oil and gas companies that are experiencing problems. To that end, according to the report provided by CNBC.com  they may also acquire energy related assets from corporations that may need to sell their share of energy based assets relatively quickly.

Current Opportunities That Investors Can Take Advantage of Now

During this current energy boom crude.com suggest that now is the time to be a part of this window of opportunity by investing in oil and gas with crude energy. They recommend making investments through direct participation in programs via working interest in the wells.  Thus, even though the price of oil continues to fall, there’s still advantages to making investments now. Including some tax advantages that are not necessarily present in other markets, reduced risks as a result of focusing on underdeveloped,  under-financed and mismanaged leases, consistent positive cash flow that is typically paid monthly for years to come, added diversification to current portfolios and being less volatile than other instruments.

Final Thoughts About Making Investments During the Declining Oil Market

According to crude.com, the current oil boom will likely last a long time. Investors who are optimistic and have a good eye for identifying opportunities in a declining market are the ones that will likely weather the economic storm for years to come.

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