Oil prices just hit $80 a barrel – and could be headed to $200.
Unfortunately, that’s not a typo.
For one, as reported by S&P Global Platts, “Global oil prices could soar to $200/b if no new investments are made in the oil and gas sector in the short-term, Oman’s energy and minerals minister said Sept. 9, in reply to the International Energy Agency’s assessment for reaching net-zero emissions by 2050.”
Two, JP Morgan analysts just said, “We believe the evolution of coal prices might reflect supply, demand, cost of capital and energy transitioning issues for all fossil fuels, and it would certainly be possible that oil prices will follow the same pattern (inflation adjusted for oil, that would be in a $150-200/bbl range).”
That would be an absolute disaster that would send the economy and stocks into a tailspin.
On top of those grim scenarios, Goldman Sachs said oil could run to $87 on supply disruption and stronger demand. By October 4, Bank of America jumped on the bandwagon, and said it could run to $100. Today, oil topped $80 – it’s highest level in about seven years.
“The $80 print became an inevitability,” said John Kilduff, partner at Again Capital, as quoted by CNBC. “Despite the rise in U.S. crude oil inventories in this week’s report, the global market remains tight and in a supply deficit. … Unless and until OPEC+ acts to meaningfully increase supplies, prices will grind higher still.”
In short, it’s going to get painful at the pump.
However, as we noted on October 4, investors can profit from the surge with the:
SPDR Energy Select Sector ETF (XLE)
Since our note on October 4, the XLE ran from $52.70 to $56.35 so far. The XLE ETF provides exposure to companies in the oil, gas and consumable fuel, energy equipment and services industries, as noted by State Street SPDR.
Invesco DB Oil Fund (DBO)
So far, the DBO has run from $13.85 to $14.47. This ETF seeks to track changes, whether positive or negative, in the level of the DBIQ Optimum Yield Crude Oil Index Excess Return plus the interest income from the Fund’s holdings of primarily US Treasury securities and money market income less the Fund’s expenses.
iShares Global Energy ETF (IXC)
The IXC ran from $27 to $28.60. The iShares Global Energy ETF seeks to track the investment results of an index composed of global equities in the energy sector. Some of its top holdings include Exxon Mobil, Chevron Corporation, BP PLC, Total SA, and EOG Resources.
All could push higher, as oil prices boom.