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What's Oil's Next Move: $10 or $150?

Written by Keith Kohl
Posted November 3, 2017

Two years ago, on December 18, 2015 — a date that will burn in the minds of every young Saudi Prince — Congress actually did something right.

You may not have seen it coming, given the fact that at the time Congress had an 82% disapproval rating.

But it happened.

That was the day it voted to lift the 40-year oil export ban that was set in place back in 1975.

WTI crude was trading right around $43 per barrel at the time.

More importantly, the United States was caught up in an oil boom that singlehandedly reversed the death spiral that had plagued our domestic production since production peaked in November of 1970:

smalloilpricechart
Click Chart to Enlarge

Flush once again with crude, allowing companies to sell our product on the global market was one of the few things Congress got right.

Today, that decision is bearing fruit… to the chagrin of Saudi Arabia.

Last May, more than one million barrels per day of U.S. crude were exported across the globe.

And things are going to get even better going forward...

Oil really sneaked up on you, didn’t it?

Don’t worry, you’re not alone.

I would wager that most of you have been a little distracted lately by the intense media spotlight that has been thrust onto the EV revolution; I’d be surprised if any of you even took a glance at an oil chart.

The headlines have been saturated with stories of the electric vehicle takeover.

Never mind the fact that Tesla lost $619.4 million last quarter.

Or that Shell posted a 50% rise in net profit.

This morning, I saw the most ridiculous prediction of my life.

Trust me, I’ve seen — and made — a few of those myself in my time.

This time, however, it was from a CNBC interview that called for oil to crash to $10 per barrel within the next six to eight years.

Rubbish.

I know, I know, dear reader… once EVs rule the roads, right?

I understand that bullish sentiment more than you might know, believe me. After all, there are now twice as many EVs on the roads in 2017 as there were a year ago.

With that kind of growth, it’s only a short matter of time before we’re sitting in the backseat of our Teslas playing games while the car chauffeurs us around.

Don’t get me wrong; the scenario above is inevitable.

But it won’t happen within eight years… and it’s irresponsible to say so.

Why?

Put some perspective on this, and you’ll see why.

Right now, there are 1.2 billion vehicles on the planet.

We’re talking about a pretty big hill to climb.

I’m not saying to lose hope, just don’t swallow the Kool-Aid.

We won’t see oil crash to $10 per barrel — we’re going to see it surge.

There are simply too many catalysts in place to prevent oil from crashing.

The general consensus right now is that the Saudis are going to prop up oil prices so they can take advantage of next year’s long-awaited IPO of Aramco. This, of course, doesn’t take into account the fact that the Saudis need crude above $70 to balance their budget.

More importantly, the near-$1 trillion in spending cuts made by oil companies between 2015 and 2020 is the true elephant in the room for higher oil prices.

As companies became leaner and meaner since prices started falling in the summer of 2014, it became apparent that many of these shale players wouldn’t be able to drill themselves out of the hole they’ve dug by borrowing to boost production.

Trust me, more fiscal discipline in the oil patch is a good thing!

This isn’t a normal bullish oil cycle.

It will be long and drawn out.

We’re staring at a generational bull market taking shape… and it’s not just in oil.

We’ll talk more about this next Wednesday.

Until next time,

Keith Kohl Signature

Keith Kohl

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A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing's Energy Investor and Technology and Opportunity.

For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.

Keith’s keen trading acumen and investment research also extend all the way into the complex biotech sector, where he and his readers take advantage of the newest and most groundbreaking medical therapies being developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s to lab scientists grinding out the latest medical technology and treatments. You can join his vast investment community and target the most profitable biotech stocks in Keith’s Topline Trader advisory newsletter.

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