Morning Brief – March 18, 2022

Within weeks, we could run into one of the worst oil supply shocks in history.

Right now, Russia could be forced to curtail about 30% of its crude oil production.  And unless Saudi Arabia and other major oil exporters step up to help, oil could gush higher.

In fact, according to CNN, “The world’s second-largest crude oil exporter could be forced to limit output by 3 million barrels per day in April, the International Energy Agency warned on Wednesday, as major oil companies, trading houses and shipping companies shun its exports and demand in Russia slumps.”

Unfortunately, unless things drastically change, $200 oil isn’t out of the question.

That’s according to hedge-fund manager Pierre Andurand, as noted by OilPrice.com.

“I don’t think that suddenly they stop fighting, the oil comes back. It’s not going to be the case. The oil’s going to be gone for good,” Andurand said.  “We’ll have to live with higher prices to keep demand down, for it to be treated a bit more as a luxury product and also to accelerate the energy transition.”

To profit from the potential oil shock, investors can always push into oil stocks, such as Exxon Mobil and Chevron.  Another way to potentially profit is with an ETF, such as:

SPDR Energy Select Sector ETF (XLE)

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. Not only does an ETF allow for diversification, you can buy it for less.

Invesco DB Oil Fund (DBO)

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. It trades WTI crude futures.

iShares Global Energy ETF (IXC)

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.

Markets

  • The Dow is down 167 points to 34,193
  • The S&P 500 is down about 25 points to 4,377.50
  • The NASDAQ is down 76 points to 14,033.50
  • Gold prices are down about $10 to $1,934.22
  • Bitcoin is down slightly to $40,573.83
  • Oil prices are up $1.17 to $104.20
  • The VIX down slightly to 26.44

 

Trading Tips

Russian stocks are worthless.

Thanks to crippling sanctions, no one in their right mind would touch these stocks.

But we have to remember what Sir John Templeton and Baron Rothschild taught us.

In 1939, Europe was just about decimated. So, Templeton bought every European stock trading below $1.00 a share and made a fortune. In fact, he bought shares in 104 companies for about $10,400. He would make a fortune. He taught us to buy excessive pessimism.

Baron Rothschild once told investors, “The time to buy is when there’s blood in the streets, even if the blood is your own.” He knew that very well, considering he made a small fortune buying the panic that followed the Battle of Waterloo against Napoleon.

Read more here. 

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