3 Reasons Why We’re In an Oil Bull Market
Oil just closed at a 10-month high!
And this is just the start of oil’s bull market.
If you’ve been listening to me, this won’t shock you.
The Real Talk: Oil is a major mega trend that every Alpha Investor should be watching.
Long-term … it will pay to be bullish on oil.
And here’s why…
Part 1: Demand ⬆️
Demand is growing around the world.
But wait a minute … Charles … wasn’t our demand supposed to go down with electrification and all the advancements in technology?
You would think that but if anything, it’s the opposite. “Black gold” is used for almost everything.
Oil isn’t going out of style any time soon.
The world oil demand is at record highs … summer air travel … increased oil use in power generation … and China.
I’ve been sharing this with you for some time now that the oil bull market is on.
Already global oil demand forecasts are wrong … they were too conservative!
At the start of the year, predictions were for 102 million barrels per day (bpd) … up from 100 million bpd a year earlier.
Well, throw those predictions in the trash … as of June, halfway through 2023, demand is up to a record 103 million bpd.
By the end of the year, I wouldn’t be surprised to see that number jump even higher.
And now OPEC slashed production and is forecasting oil demand will rise to 110 million bpd over the next decade!
Hang on to your hats … because that means oil prices are on a one-way ride higher.
Part 2: Winter Is Coming
Already we are seeing rising natural gas prices in anticipation of a cold winter.
Oil prices are already up more than 30% from the low made at the end of June.
What that means… Hold on to your mufflers — oil prices will soar.
Oil consumption will reach a peak like it usually does during the colder months…
And prices could surge even higher.
Weather this year had a huge impact globally on production and the supply chain.
And the storm season still threatens delivery.
We’ll have to wait and see what kind of things Mother Nature has in store for us this winter.
Part 3: Pent-up Demand
The U.S. Strategic Petroleum Reserve (SPR) is located in the U.S. and is the world’s largest supply of emergency crude oil.
The Biden administration started dipping into reserves some time ago in order to lower gas prices.
In fact, close to 180 million bpd were withdrawn and the SPR now stands at a 40-year low:
Eventually it will have to be replaced.
When the U.S. government goes into the oil market to buy that much oil … what do you think that will do to the price?
If you said: “prices will soar higher” give yourself a gold star.
And that’s a great opportunity for you…
The End: Profit from Oil
In my Alpha-4 Approach, I spend a lot of time researching rock-star leaders in mega-trend industries.
And I took it a step further for my top oil company recommendation this year — I sat down with the CEO and shared our conversation with a group of my readers.
Because the decisions of a CEO can have a huge impact on your money.
And what I learned in our talk blew my socks off…
Here’s a short clip:
Charles Mizrahi: I’ve been doing this about as long as you’ve been drilling for oil — about 40 years or so — and I’ve learned that the best investments I’ve had over the years are ones with rock-star CEOs.
Because when you have a CEO with a vision, skin in the game and a track record in an industry with a tailwind, it’s kinda hard not to make money.
CEO: I’ve had a pretty blessed career. I have had the opportunity to work with some really great people. I took a summer job in, I believe, 1979, working as an operator in a big field. It was a famous field. Those fields are still producing to this day.
At the time I kinda fell in love with the industry. I fell in love with the locations, the people in the field and what they did. Then the next year, in the late ‘70s it was part of the oil boom, there was a lot of opportunity here.
Charles: Oil is running through your veins. Now you get your chance to run [Oil Company], and I remember reading that you took all the money you have, which was $22 million or so, and you put it all on black gold. Does your wife tell you: “Keep some for a rainy day?” Or anything to that effect?
CEO: There’s almost no way to apologize or understand the CEO mentality in this particular town. Maybe even in the whole oil business. We do tend to be all-in. We tend to be longer-term believers in the commodity. We tend to be optimists.
If you put all those things together, I think it can be pretty dangerous in that you have a lot of confidence in your ability, you know what you can do and you put your money in there. Once you put your money in there, you leave it there. You don’t trade around it. You don’t sell it. You don’t do anything.
You’re in it. Up, down, sideways, whatever happens, you’re in it.
Now that’s the kind of CEO we like to partner with.
When you add up all the parts of this oil story and add our Alpha-4 checks… Well, that has the makings of a happy ending.
I can’t tell you if it will be tomorrow, next week or next month … but I can tell you oil WILL be even higher in the next five years.
And if you want my #1 oil and gas stock recommendation (and to hear more from its rock-star CEO) — click here now for the details.
Founder, Alpha Investor
McDonald’s Did What?
I’m going to let you in on a little secret. When I’m alone in Dallas and my wife and kids are in Lima, I’ve been known to hit the McDonald’s window hard, particularly at breakfast time.
Don’t judge me. We all have our vices.
But while I do enjoy my bacon, egg and cheese biscuits, I generally try to avoid going inside a McDonald’s. It’s either the drive-through … or keep driving.
I was thinking about this when I read that McDonald’s planned to phase out its self-service drink machines. Customers wanting refills will have to ask an employee.
Now, some of this is McDonald’s simply realizing that fewer people actually dine in these days. They’re far more likely to hit the drive-through window or do a delivery service. About 40% of McDonald sales are now made via their mobile app or via partners like Uber Eats.
McDonald’s is also reducing its dining room sizes overall, and the self-service machine is part of that.
There’s also the gross factor. You don’t really want to use the self-service machine after my children have been within a 10-yard radius of it. And eliminating the machine gives the company one less thing to clean and spend expensive employee man-hours on.
But here’s where it gets interesting.
McDonald’s also mentioned theft as a factor. Apparently there are a non-trivial number of diners that bring in empty outside cups and help themselves to a cold Dr. Pepper.
I can follow the implied logic: McDonald’s figures they can curb the number of contraband refills if customers have to proactively ask for one, as opposed to helping themselves. You’re also less likely to fill up your drink on the way out the door if you have to wait a few seconds to ask someone to help. Either way, the company saves money.
And it’s not hard to see why all of this is happening today. Sure, the lack of dine-in customers is a major factor. But so is the shrinkage in real wages we’ve seen in recent years.
Inflation-adjusted wages exploded higher starting around 2015, and lasted through the middle of 2020 before collapsing lower. (Inflation growing fasting than earnings causes this to go into reverse.)
With the average American getting poorer over the past three years, you’re seeing little things like abuse of the self-service Coke machine starting to be a problem.
On the upside, McDonald’s actions show that the company still has its knack for adapting with the times!
And if you’re looking for good, solid blue chips with a history of doing exactly that, see Charles Mizrahi’s latest research into the oil and gas industry. He gave you a preview today on why you want to ride the high on oil…
Trust me, it’s an investment opportunity you don’t want to miss out on.
Chief Editor, The Banyan Edge