Editor’s Note: Before you begin reading your report, “Oil Price Outlook 2024: 3 Stocks Every Oil Investor Needs to Know for 2024,” we wanted to share this timely message from our resident oil expert, Keith Kohl.
Buffett’s $12 Billion Bet
Warren Buffett is making big waves in the oil industry…
Recently, the Buffett-backed energy firm, Occidental Petroleum, made a substantial $12 billion acquisition of CrownRock, a privately owned shale oil driller operating in the Permian Basin…
This move comes on the heels of Buffett’s massive $10 billion investment in Occidental Petroleum, a key player in the Permian Basin.
The Permian oil Basin, located in West Texas, is not just America’s most prolific oilfield, accounting for a staggering 44% of the nation’s oil production…
It’s even producing more oil than most OPEC countries.
Buffett’s big investments indicate his keen interest in securing a larger share of this lucrative oilfield.
However, what’s not grabbing the headlines is an even more significant development in the Permian Basin, one that remains off most investors’ radars.
A small Texas oil company has developed a new drilling method that could be the most significant breakthrough in the history of oil production…
One that stands to DWARF the riches generated by the fracking boom.
It’s called the “Horseshoe Well”.
The Journal of Petroleum Technology says this revolutionary method is a “design unlike anything most have seen in the shale sector before.”
And it’s set to usher in an oil boom unlike anything we’ve seen in the history of the oil markets.
Grab hold of the details here while you still can.
Oil Price Outlook 2024: 3 Stocks Every Oil Investor Needs to Know for 2024
I know, I know… everyone wants to know when crude oil is going back to over $100 per barrel; they’re the investors that don’t give the sector a second thought until it’s far too late, when the hyperbolic tweets and headlines start popping up everywhere. By then, it’ll be too late.
Fortunately, we’re going to get our buying opportunity before that happens…
There’s a two-headed bull set to stampede through the oil markets in 2024.
Each one of these catalysts has the power to push crude prices higher, and when I told you that $70 oil was a screaming buy recently, I meant it.
Let’s start with the most obvious one: War.
There’s no question that the primary driver of oil prices in 2022 started the moment that Russian tanks entered Ukraine. That year, crude soared well into triple-digit territory as Putin weaponized Russia’s energy sector.
Over two years later, those headlines still have the power to move oil higher. And one thing that has become clear by now is that both sides recognize how crucial each others’ energy infrastructure is.
To give you an idea of just how vulnerable they are, take a look at what happened over the weekend, when drones from Ukraine bombed a major gas export terminal near St. Petersburg. Operations were quickly suspended.
Just a few days prior to that, another Ukrainian drone hit an oil depot in southwest Russia.
Keep in mind that these attacks weren’t on the front lines of the war but deep in Russian territory.
Just like that, Brent crude prices spiked back up to $80 per barrel.
This geopolitical time bomb isn’t even to mention the escalation taking place in the Middle East, where the U.S. and Iran are getting drawn deeper into the conflict that has been growing hotter since the October 7 attacks.
The problem is that things are progressing in the wrong direction.
It’s good then that demand is low, right?
Actually, that couldn’t be further from the truth.
The Oil Delusion Cannot Be Ignored
Now before you start looking for a crystal ball, pouring out your tea leaves, or start looking for some plutonium to fuel the flux capacitor in your DeLorean, you should know that this isn’t some feat of magical foresight — everyone should see this one coming.
And yet, delusions still run rampant among the experts in the market. Hey, maybe they get caught up in their own hype. Perhaps they drink too deeply from the kool-aid to see what’s really going on.
But for those of you that do see through the veil, you’ll be smiling all the way to the bank.
In late March (2024), the Macquarie Group came out and projected that U.S. oil production would end the year at around 14 million barrels per day then climb to 14.5 million barrels per day in 2025.
As reported by Bloomberg, Macquarie’s analysts had said, “this year’s headwinds could flip to tailwinds in a scenario where the growth impulse from private companies recharges and public companies attack high-graded resource bases next year.”
I wish I could say these kinds of predictions come straight out of left field, but the truth is that they aren’t the only ones making wild predictions these days.
Back in mid-February ’24, Jim Cramer suggested that U.S. oil companies would be pumping 15 million barrels per day right now if they weren’t so greedy:
Look, I’ll confess I’ve had some bouts of wishful thinking in the past, so I understand wanting to be optimistic when it comes to our energy security.
But there’s a difference between optimism and delusion.
Like most people, I was pleasantly surprised in 2023 when U.S. oil output defied all the skeptics and rose by nearly a million barrels per day. Like I mentioned earlier, it’s not an extremely bold prediction to see little to no growth in U.S. production this year.
And I know I’m not the only one that sees this coming.
It may have taken the market a while, but they’re finally starting to realize that the supply/demand fundamentals are much, much tighter than they look.
This will become much more apparent as we head into the summer driving season when demand typically peaks for the year.
However, the problem isn’t necessarily that U.S. oil output will remain stagnant in 2024. Even the EIA has to admit that growth will be abysmal for the rest of the year, with U.S. production averaging 13.2 million barrels per day for the rest of the year.
The Eternal Battle of Oil Bulls & Bears
My long-time readers know full well that there have been two forces battling each other in the media for years over a different forecast.
They’ve become the eternal bulls and bears inside the global oil markets, and each one has their agenda to sell you.
Look, we’ve talked about these two prevailing forces a lot over the last year.
In one corner, we have the ever-bearish International Energy Agency. Consistent in its pessimism over global demand and far too hopeful on the supply-side of the equation, the IEA has cemented itself over the last few years as the Debbie Downer for oil stocks.
But that’s what we would expect from a group that is leading an overly aggressive push away from oil and gas and towards renewable energy, right?
After all, Fatih Birol, the head of the IEA, is the head cheerleader for the net zero transition by 2050.
And the IEA’s February Oil Market Report starts off touting the same bearish sentiment that it’s been saying (and later revising) for a long time:
“Global oil demand growth is losing momentum, with annual gains easing from 2.8 mb/d in 3Q23 to 1.8 mb/d in 4Q23. A sharp drop in China underpinned an 830 kb/d decline in global oil demand to 102.1 mb/d in the last quarter of 2023. The pace of expansion is set to decelerate further to 1.2 mb/d in 2024, compared with 2.3 mb/d last year.”
The problem is that the IEA has a bad habit of revising their bearish forecasts to the upside. A few short months ago, they were calling for 2024’s global oil demand to only rise by 930,000 b/d, which was another upward revision to the 880,000 b/d it was predicting last October.
At some point, you have to wonder how many times you can backtrack and still be taken seriously. Oh, that’s right, because calling for higher oil demand means their green transition would slow… my mistake.
Then there’s the other corner of the ring: OPEC.
As expected, OPEC is the yin to the IEA’s yang — the perma-bull in the global oil markets.
Now, you know just as well as I do that we should be taking OPEC’s word with a grain of salt. Their agenda is just as transparent as the IEA since higher crude prices dump an immense amount of wealth into OPEC members’ coffers.
But let’s give a little credit where credit is due…
Throughout the last year, OPEC has at least stuck to its forecasts. In fact, the oil cartel still maintains that global oil demand will grow at a pace of 2.2 mb/d in 2024. We haven’t seen them back down from those projections yet, and the consequences of OPEC being right cannot be overstated.
If true, that means the world will average an all-time record of 104.4 mb/d this year, exiting 2024 at a consumption rate of 105.47 mb/d and then growing to 106.2 million barrels per day in 2025:
Despite being diametrically opposed on nearly everything relating to oil, these two bitter enemies ACTUALLY have something in common.
Both agree that global oil supply growth this year is going to come primarily from three non-OPEC regions: North America, Guyana, and Canada.
And the only question that should be in your head right now, as winter is fastly approaching an end, is “Who am I buying?”
Energy and Capital’s Oil Stocks to Watch in 2024:
- Pioneer Natural Resources (NYSE: PXD)
- Halliburton Company (NYSE: HAL)
- Occidental Petroleum Corporation (NYSE: OXY)
The 2 Oil Stocks I’m Buying On the Next Dip
I don’t think any of you should be surprised by the first oil stock I’m buying on the next dip.
With OPEC+ firmly in control of the global supply capacity this year, the game has changed somewhat. And whether the media believes it or not, U.S. output IS NOT going to grow much higher this year.
What that means is if the market tightens — as I fully expect it to this summer — it’ll be the oil princes in Saudi Arabia who will be in the driver’s seat.
That makes the companies keeping our crude output at record levels so incredibly important, because every barrel of production that we lose will be another bit of leverage for OPEC+.
And at the risk of sounding like a broken record, the oil game in the United States has changed completely from the early days of the shale boom, when a debt-fueled drilling frenzy pushed production higher.
That’s what makes oil stocks like this one invaluable going forward.
You can check it out for yourself right here.
The second oil stock you should be looking for isn’t located in the United States, and I guarantee you that you won’t see it splashed across media headlines.
Within the next few months, the Trans Mountain pipeline expansion is going to finally be completed, which will open up the Canadian oil sands to be exported across the Pacific. Up until now, the only market these Canadian oil companies could really tap into has been the United States.
Players like Cenovus Energy (NYSE: CVE) are planning to boost output by nearly 20% over the next five years, and will soon have access to key Asian markets like China.
Not only will it have access to more oil-hungry customers like China, but is trading at strong valuations right now.
Personally, I think it’ll be a 2024 winner that’ll surprise you. Will we see $100 oil in 2024? I don’t know if it will run that high, but it’s possible. What I do know is, you do not want to sit on the sidelines for the coming months.