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Why that Bubbling Oil Price Makes Both Big and Small Producers Even more Attractive

By Malcolm Stacey | Wednesday 16 May 2018


Disclosure: I own shares in one or more of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Hello Share Scrollers. I think I recall saying way back in 2017 that the oil price could soar to reach $80 a barrel in the Spring. And we’re only a dollar away from that forecast now. Of course, I did not know that troubles in the Middle East would get so horribly worse.

Instead, I based my estimate on the way emerging countries are manufacturing more stuff and buying more cars. Nevertheless, the rise has exceeded most City expectations.

I read this week an article headed ‘Is this a good time to invest in energy?’ The writer began by saying that the oil price could rise to 130 dollars or fall to 30. And nobody could guess accurately as the oil price is ‘so volatile’. Not over helpful that, though the writer did provide much more useful insight later on.

My own modest view is that the price, which once reached $140 a barrel (June 2008), will continue its upward march. One reason is that, very sadly, the Middle East fire could soon become an inferno. The other is that those aforementioned developing countries will continue to develop. While renewable sources of energy, which I support, will fail dismally to keep pace with demand.

I seem to remember reading that some oil companies had only to achieve $30 a barrel to stay ahead. If that's true, think of the profits to be made out of $80 barrels. Which brings me to emphasise once again that the big producing oilers are worth a look. And remember that Royal Dutch Shell (RDSA), which has this week again breached its all-time record, pays a useful dividend. The yield I have is 5.6%.

BP (BP.) is also besting its year highs and is up there with the higher divi-payers. And now that the Gulf of Mexico disaster is all but over as far as compensation liability goes, it also seems a reasonable play. And what I’m saying probably applies to all producing oilers, even small ones.

Now please join me for that Punter’s Return special pint.


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