Oil is now down at multi-year lows and an old say goes something like: "If something cannot last forever it has to stop". This is the case for oil at the moment. OPEC members are talking about an emergency meeting if prices do not recover - China has said that it is no longer going to pass on any oil price reductions as it tries to reduce emissions from vehicles - this effectively puts a floor on the oil price at around $38.00 - as China is a huge importer of oil this is significant - what does all this mean for investors?
Oil stocks are cheap as they reflect the crude price - but as this cannot last this may make oil stocks look cheap - the only caveat is nobody knows when the price will rise, but it will rise! - the idea would be to look at bombed out oil stocks in the small to mid tier which have been affected the most by the oil price crash and which could now be in a position to benefit the most.
Chose with care and take a 2 year view.
Merry Christmas and a Happy New Year to all.