Matt Badiali is one of Banyan Hill’s expert investment advisers. When he joined Banyan Hill’s editorial staff, he brought years of expertise in geology with him. Although he has a master’s degree in geology from Florida Atlantic University, most of Matt’s knowledge comes from his hands-on work in various places. He worked as a consultant, and his work took him to countries such as Singapore, Hong Kong, Switzerland, Iraq, Turkey, New Guinea and several others. When Matt Badiali visited those countries, he did research and learned about local laws. He learned about political issues, governments and resources. For more than a decade, he has been blending his knowledge of geology with investing.
Since Matt Badiali knows how to look beyond basic research and knows how to find little-known information that is specific to various areas, he is a valuable investment adviser for metals and natural resources. Recently, Banyan Hill published an article by Matt Badiali about oil prices. His article serves as a good reminder that investors can benefit from listening to his bold advice.
Matt Badiali Explains Oil Prices
In his article, Matt Badiali said that oil outperformed the S&P 500 by more than 30 percent during the past year. Oil was not viewed as profitable before that point. Between 2015 and 2017, more than 115 oil companies went bankrupt, and there was an abundance of oil because of America’s shale revolution. Although slow economic growth in Europe kept demand down, future demand looked doubtful then because of the increased production of electric cars. In 2017, Matt talked about oil investments and made some recommendations for investors at Canada’s Sprott Natural Resource Symposium. However, his audience did not want to hear about oil.
Matt Badiali also wrote about his oil recommendations then and said that extraction was expensive. He said that there was no way for a company to make $50 on a single barrel. While most people were not interested in Matt Badiali’s insightful advice, his predictions were right. For the past two years, the S&P 500 performed well and was up by about 45 percent in February. The combination of that good performance with the collective negative sentiment against oil led to a considerable rise in oil prices. There were other factors, which will be covered in the next section. In the past year alone, the price of oil rose by more than 45 percent, and it rose by more than 145 percent since early 2016. There is no longer a surplus, and most developed countries’ stockpiles are under the five-year average by about 100 million barrels.
About two years ago, the supplies in most countries exceeded the five-year average by 400 million barrels. Although the market is tight, Matt saw this coming. Readers who bought the stocks that Matt Badiali recommended in 2017 saw gains of 30 percent in the past year. Since oil was so despised for such a long time, Matt warned that there was still room for the bull market to run. His current advice to investors who seek buying opportunities is to use short-term declines.
The reason is simple: They don’t earn the full oil price.https://t.co/7MA0v8ar1l#Oil #Shale #CrudeOil #Natural #Resources #SP500 #NASDAQ #NYSE #Economy #Trading #Investing #Stocks #StockMarket #RealWealthStrategist #BanyanHill pic.twitter.com/UfP2u4uhbh
— Matt Badiali (@MattBadialiGuru) May 25, 2018
Why Oil Prices Are Rising
There are several reasons why oil prices are climbing. First, contract competition is heating up. Since 1944, the U.S. dollar has been prominent in energy markets. Most countries that export oil use the dollar for its stability. However, China is opening a new yuan-based exchange for crude contracts. With the exchange being in Shanghai’s Free Trade Zone, people from all over the world can easily use it. U.S. oil prices may increase with this new development.
Today, there is also a considerable amount of terrorism-related turmoil in Yemen. Houthi rebels are especially detrimental to the country’s stability restoration attempts. They took over Sanaa in 2015 and recently launched a missile attack on Saudi Arabia. Although the attack was averted, geopolitical analysts remain concerned about the capabilities of the Houthi rebels. If they attack again and are successful in hurting Saudi Arabia, the energy markets will see price increases. Since Saudi Arabia produces more than 35 percent of the globe’s oil, investors are on edge about the instability in Yemen.
Another issue that is affecting oil prices is President Trump’s decision about Iran. Since he rescinded the deal, the implications could be disastrous. He has voiced his opposition to the deal with Iran since the early days of his campaign and is not likely to change his stance. The United States is now facing threats of consequences from Russia, and countries around the globe will likely develop a dimmer view of the country. With geopolitical tension rising, Matt Badiali expects to see oil prices rise. The Iran deal was significant because the country exports such a large amount of oil. When its contract was rescinded, its exporting capabilities were cut. This will lead to an oil shortage in several markets. Matt’s advice to investors who want to avoid backlash from this is to expose themselves to leading oil companies such as Chevron and Exxon.
The Venezuela crisis is another driving force behind oil prices since its exports are decreasing. Venezuela’s financial crisis is killing the economy from all angles. With foreign investors pulling out of the country, inflation has skyrocketed. In the late 1990s, Venezuela produced about 3 million oil barrels each day, and it produces about 1 million barrels per day now. Analysts are predicting a decrease of another 200,000 barrels each day by the time 2019 arrives. If the crisis continues there, production could drop even more. Most of Venezuela’s oil supply comes from offshore rigs, which have dwindled in numbers recently.
Matt encourages investors to watch each of these issues and countries closely. He will continue to monitor the situations and will offer his insight to his followers. As someone who often checked drills himself and talked to everyone from field workers to executives in the past, investors can rest assured that Matt’s advice is still backed by extensive research.
