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If these breathtaking oil markets make you dizzy, you are far from alone.
But this is not the time to worry, it's time to make the most of oil to get dividends of 7% and more!
And, as you've probably guessed, I have the perfect background for you, three to be precise. One of these counter-current purchases yields 10.4%! And each of these 3 expertly managed cases also offers protection against the much needed inconveniences.
But before we get to them, let's talk about what's really happening with crude these days.
You probably noticed that oil was on a roll since the middle of 2017 until a few weeks ago when it went back to the ground.
It's a huge collapse, even for a product as volatile as oil. So, what has happened?
Some people talk about overproduction. And it is true that world production rose after falling in April – but the numbers have been so volatile that it is difficult to draw many conclusions, and production is virtually stable compared to a year ago.
Also note that global data on oil production are only available until July – but most estimates suggest that production has not changed much in recent weeks, despite attempts by Russia and Saudi Arabia to close wells and boost prices.
It's thanks to the US crude, which has prevented OPEC from manipulating the markets. Just look at 2004, before the hydraulic fracturing revolution begins and OPEC still dominates oil. It was a period of economic growth similar to that of 2018 and the cartel has constantly guided production upward.
While OPEC is virtually paralyzed, Saudi Arabia and the rest of the cartel can no longer influence prices as they did before, by cutting production, making oil prices more difficult to predict.
What about the demand, then?
Oil consumption rose 1.5% from a year ago in 2018, according to the International Energy Agency, which also says there is no evidence that demand will fall any time soon. This is good news for the future of oil. It also means that the recent price volatility is not a sign of an imminent collapse of demand that would destroy the value of the commodity.
So, how should we think about oil, then?
On the other hand, OPEC can not create an artificial shortage to inflate bubbles, which in theory limits prices. On the other hand, stable demand means that oil prices have a solid floor on which they are unlikely to go down. If this theory is correct, we should assume that since oil production in the United States has skyrocketed, there is a new range of oil prices that is lower than half of current production.
And that's exactly what the numbers tell us.
Before US crude oil production really exploded, oil was in the $ 70 to $ 100 range, although global economic growth was sluggish in the aftermath of the subprime mortgage crisis. Then, after the 2014 oil crash, the crude was reduced to a new (narrower) range of about $ 45 to $ 65. It's only when oil has exceeded twice in recent months that it has fallen really difficult.
That seems to be our answer.
The recent oil crash was not caused by production or supply, but by oil traders who were over-zealous and did not understand how the new market dynamics worked.
So what now?
Today, oil prices are at $ 55, which is in the middle of the new range for oil, suggesting that oil futures are valued fairly. This would suggest that you can invest in the crude right away, but you might want to wait a little longer.
In other words, unless you find something ridiculously oversold, because speculators are banking on the future decline of oil. The good news is that you can, while getting big dividends for your problem.
3 ridiculously cheap energy funds paying up to 10.4%
Let's start with Adams Natural Resources Fund, one of the oldest closed-end funds (CEF). Founded in 1929, this fund has survived a lot turbulence through the cautious approach of its leaders in investing in value.
The PEO dividend is relatively low (6.6%) according to the CEF, but the most interesting is that the recent sale of oil has resulted in the market price of the fund trading at a ridiculous price relative to the value of its assets (net asset value). NAV)!
This is the lowest PEO price since the beginning of 2016. If you buy at this time, you will get a total return of 20.3% in less than 3 years, regardless of fluctuations in the price. oil.
A bolder option would be the First Trust Energy Infrastructure Fund, with a huge similar shift in its reduction to the net asset value.
In addition to the return of 8.8% that this fund pays, you have the opportunity to profit from a total return likely greater than 30%, just like the one that investors got for the last time the discount was as important, early in 2016.
The third option is the big one: a return of 10.4% with the Renaissance Cushing Fund, which is now trading at a discount of 12.6%, near where it was in early 2016, too!
The return of SZC since the last time its discount was so low at the beginning of 2016: a nice rise of 62.5%. It's now a good time to buy, before the story repeats itself.
Disclosure: none
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If these breathtaking oil markets make you dizzy, you are far from alone.
But this is not the time to worry, it's time to make the most of oil to get dividends of 7% and more!
And, as you've probably guessed, I have the perfect background for you, three to be precise. One of these counter-current purchases yields 10.4%! And each of these 3 expertly managed cases also offers protection against the much needed inconveniences.
But before we get to them, let's talk about what's really happening with crude these days.
You probably noticed that oil was on a roll since the middle of 2017 until a few weeks ago when it went back to the ground.
It's a huge collapse, even for a product as volatile as oil. So, what has happened?
Some people talk about overproduction. And it is true that world production rose after falling in April – but the numbers have been so volatile that it is difficult to draw many conclusions, and production is virtually stable compared to a year ago.
Also note that global data on oil production are only available until July – but most estimates suggest that production has not changed much in recent weeks, despite attempts by Russia and Saudi Arabia to close wells and boost prices.
It's thanks to the US crude, which has prevented OPEC from manipulating the markets. Just look at 2004, before the hydraulic fracturing revolution begins and OPEC still dominates oil. It was a period of economic growth similar to that of 2018 and the cartel has constantly guided production upward.
Saudi Arabia and the rest of the cartel can no longer influence prices as they did before, by reducing production, making oil prices harder to predict.
What about the demand, then?
Oil consumption rose 1.5% from a year ago in 2018, according to the International Energy Agency, which also says there is no evidence that demand will fall any time soon. This is good news for the future of oil. It also means that the recent price volatility is not a sign of an imminent collapse of demand that would destroy the value of the commodity.
So, how should we think about oil, then?
On the other hand, OPEC can not create an artificial shortage to inflate bubbles, which in theory limits prices. On the other hand, stable demand means that oil prices have a solid floor on which they are unlikely to go down. If this theory is correct, we should assume that since oil production in the United States has skyrocketed, there is a new range of oil prices that is lower than half of current production.
And that's exactly what the numbers tell us.
Before US crude oil production really exploded, oil was in the $ 70 to $ 100 range, although global economic growth was sluggish in the aftermath of the subprime mortgage crisis. Then, after the 2014 oil crash, the crude was reduced to a new (narrower) range of about $ 45 to $ 65. It's only when oil has exceeded twice in recent months that it has fallen really difficult.
That seems to be our answer.
The recent oil crash was not caused by production or supply, but by oil traders who were over-zealous and did not understand how the new market dynamics worked.
So what now?
Today, oil prices are at $ 55, which is in the middle of the new range for oil, suggesting that oil futures are valued fairly. This would suggest that you can invest in the crude right away, but you might want to wait a little longer.
In other words, unless you find something ridiculously oversold, because speculators are banking on the future decline of oil. The good news is that you can, while getting big dividends for your problem.
3 ridiculously cheap energy funds paying up to 10.4%
Let's start with Adams Natural Resources Fund, one of the oldest closed-end funds (CEF). Founded in 1929, this fund has survived a lot turbulence through the cautious approach of its leaders in investing in value.
The PEO dividend is relatively low (6.6%) according to the CEF, but the most interesting is that the recent sale of oil has resulted in the market price of the fund trading at a ridiculous price relative to the value of its assets (net asset value). NAV)!
This is the lowest PEO price since the beginning of 2016. If you buy at this time, you will get a total return of 20.3% in less than 3 years, regardless of fluctuations in the price. oil.
A bolder option would be the First Trust Energy Infrastructure Fund, with a huge similar shift in its reduction to the net asset value.
In addition to the return of 8.8% that this fund pays, you have the opportunity to profit from a total return likely greater than 30%, just like the one that investors got for the last time the discount was as important, early in 2016.
The third option is the big one: a return of 10.4% with the Renaissance Cushing Fund, which is now trading at a discount of 12.6%, near where it was in early 2016, too!
The return of SZC since the last time its discount was so low at the beginning of 2016: a nice rise of 62.5%. It's now a good time to buy, before the story repeats itself.
Disclosure: none
