Oil and gas markets represent a popular investment avenue for many investors around the world, with the US being no exception. It is, however, always advisable for investors to fully understand what they are getting into, before they sign on the dotted line. If you too are looking to invest in oil and gas, it is important to stay updated on the latest oil and gas investing news and partner with a reputable capital investment firm. To help you get started, this blog covers four factors you need to look out for when investing in oil and gas.
1. US Shale Output
In 2018, the International Energy Agency and Energy Information Administration made their predictions regarding the US Shale output. Last year, EIA expected the US output to be at an average of about 10 million gallon per day. As the year progressed, a number of red flags popped up, raising a lot of questions about the growth of the US shale industry. It is, however, important to note that the industry is now stabilizing. It is, however, still advisable to be aware of shale output fluctuations by reading oil and gas investing news to make an informed decision.
2. OPEC Production
OPEC, Organization of Petroleum Exporting Countries, followed a number of procedures to restore stability in the oil market. The measures included contracting output limits and maintaining strong cooperation among participating countries. Although the discussion to revise the limit is still underway, it would be safe to say that OPEC may revise production limits in times to come. Though things are still unclear, it is important to be aware of any changes in OPEC’s strategy in order to drive potential high returns from oil and gas investments.
The changes in global oil and gas inventories are bound to affect OPEC’s strategy, and the US oil and gas market will be a key catalyst in the change. Here is an excerpt from the IEA’s Oil Market Report - December 2017: “Due to the high growth rate from US Shale, expectations of rise in inventories is a huge possibility in 2018.” On the flipside, OPEC countries, with a contracted production limit, are likely to experience a decline in inventories. As the profitability of oil and gas investments largely depend on the demand to supply ratio, it is essential for investors to be aware of inventory changes in global oil markets.
4. Upcoming Reserves
According to the OPEC Annual Statistical Bulletin 2017, 81.5 percent of the world’s crude oil reserve constitutes the OPEC’s participating countries, out of which, 65.5 percent are located in the Middle East. Although most people prefer to invest in crude oil reserves that are currently available, it is advisable to invest in upcoming reserves as the demand of oil and gas will only increase in future. Investors, however, must be aware of the risks involved before putting their money in upcoming oil and gas projects.
The Bottom Line
Investing in oil and gas without adequate knowledge can do more harm than good. Staying updated about the latest oil and gas investing news is, therefore, important in making an informed decision. Research the market’s current conditions to be aware of the different risks involved. In addition, it is also important for investors to understand and analyze how to invest in the oil market and partner with a reputable oil and gas investment company that can connect them with promising direct investment opportunities in oil and gas.