The Saudi's started the oil price war several years ago convincing OPEC members to go along in an attempt to drive out U.S. frackers, which they view as their chief threat to world oil dominance. The price of oil plummeted to just $28/bbl. as a result. The problem is that their strategy didn't work. Yes, some oil companies with poor balance sheets folded into Chapter 11. But for the most part, they survived. They cut costs. They shut in production. The cut cap ex. They survived.
About a year ago, the Saudi's appointed Deputy Crown Prince Mohammed bin Salman, the son of King Salman, as the head of their economic diversity efforts. He knows that the Kingdom needs oil at $110/bbl. to support their social spending that ultimately keeps their people content. Without it, there could be an uprising the unseats the Kingdom's ruling elite.
So the Saudi's helped to engineer an oil production cut. Prices has slowly risen to about $53/bbl. Increasing demand will move that price to $60 at year's end, Imo. In addition, the Saudi's are busy buying up U.S. reserves and companies. Why? they now appear to want in on the fracking boom as well as other in line businesses (e.g. refineries, pipelines, etc.).
I watched Cramer last night and he too believes that this is the year of natural gas. I personally prefer the pipelines (they are much more immune to commodity price swings) and pay a great dividend. I think LNG will soon take off as well. More gas production means more pipeline throughput. And Trump is going to approve pipeline construction at much faster rates.
There are some great pipelines to consider. Some great natural gas producers to consider. Gas is much cleaner than oil and has increasing demand. The Saudi's, Imo, recognize this and want in on the action. Look for low cost producers, like EOG, APC, etc. In the pipeline space, I like the ETE family, KMI (starting in 2018), and I think ENB after things settle down a bit will be a good buy as well. Some smaller pipelines pay terrific dividends of 7% and more, sometimes much more.
About a year ago, the Saudi's appointed Deputy Crown Prince Mohammed bin Salman, the son of King Salman, as the head of their economic diversity efforts. He knows that the Kingdom needs oil at $110/bbl. to support their social spending that ultimately keeps their people content. Without it, there could be an uprising the unseats the Kingdom's ruling elite.
So the Saudi's helped to engineer an oil production cut. Prices has slowly risen to about $53/bbl. Increasing demand will move that price to $60 at year's end, Imo. In addition, the Saudi's are busy buying up U.S. reserves and companies. Why? they now appear to want in on the fracking boom as well as other in line businesses (e.g. refineries, pipelines, etc.).
I watched Cramer last night and he too believes that this is the year of natural gas. I personally prefer the pipelines (they are much more immune to commodity price swings) and pay a great dividend. I think LNG will soon take off as well. More gas production means more pipeline throughput. And Trump is going to approve pipeline construction at much faster rates.
There are some great pipelines to consider. Some great natural gas producers to consider. Gas is much cleaner than oil and has increasing demand. The Saudi's, Imo, recognize this and want in on the action. Look for low cost producers, like EOG, APC, etc. In the pipeline space, I like the ETE family, KMI (starting in 2018), and I think ENB after things settle down a bit will be a good buy as well. Some smaller pipelines pay terrific dividends of 7% and more, sometimes much more.