By most fundamental measures, oil prices should be declining. Russ explains why they’re on the rise instead, how this has helped energy stocks in 2014 and why investors should still consider an overweight to the global energy sector.
It’s hard to read the headlines of the past several years and not come to the conclusion that the world, or at the very least the United States, is awash in oil.
In fact, the Energy Information Administration announced last week that oil inventories in the United States are approaching an all-time high. Meanwhile, last year, thanks to shale drilling, U.S. crude production rose to the highest level in a quarter century. The United States is set to overtake Saudi Arabia as the world’s largest producer of energy.
By most fundamental measures, oil prices should be declining. So why is Brent Crude at nearly $110 a barrel, close to multi-year highs?
Market Realist – In June 2014, the Brent spread climbed to over $113 a barrel for the first time this year. West Texas Intermediate (or WTI) soared from $95 a barrel in January 2014 to settle at $106.53 a barrel in June—its highest since mid-September 2013. In 2013, the average spot price for WTI crude oil came to just under $98 a barrel. Brent hasn’t traded below $100 since July 2013, while WTI crude closed above $104—its highest level in nearly three years.
Oil prices have experienced a steady uptrend this year despite increasing inventory levels as the U.S. ramps up supplies. Read on to learn more about the steady oil price rise.