Profit Pregame

The Upcoming “Oil Supercycle” Panic

Thanks to the slow but steady pandemic recovery, we’ve seen crude oil prices make a dramatic jump. But the question is, can this upward trend continue?

What’s happening?

It’s the question on everyone’s mind. Oil has rallied to nearly $70 per barrel and many are wondering if we’re on the cusp of a new supercycle and a potential supply shortfall. And this speculation isn’t completely outlandish given what we’ve been seeing lately.

For instance, crude rallied to a 14-month high last week after Saudi Arabia and its allies surprised the markets with plans to continue with a tight hold on output. In turn, this led to Wall Street banks, such as Goldman Sachs, calling for the beginning of a bull market as demand continues to “outpace supply.”

But one recent study is singing a different tune. So, before you make a rush decision about your oil investments or head to the pump to fill up your tank, let’s break down what they had to say.

Here’s what’s happening…

Where’s the money?

The International Energy Agency (IEA) announced yesterday it’s not expecting a supercycle. In fact, it’s not even expecting an extended period in which prices rise well above their long-run trend.

While we may see a spike in price per barrel, possibly even hitting $100, the IEA has pointed out how there is too much oil available in the global markets for a supercycle to really take hold. And I think the IEA is spot on.

But there’s still plenty of room to ride oil names to a profit. And here’s how you can do just that.

How do I get some?

There’s no denying that oil has been on fire as the world slowly opens back up. But over the last three days, we’ve actually seen a decline in the industry. And the stocks have been moving lower as well.

But that hasn’t caused the wave of bullish activity we’ve been seeing to slow down. In fact, we’ve seen an uptick in calls buyers in names such as Halliburton Company (HAL), Occidental Petroleum Corporation (OXY), Schlumberger NV (SLB), and APA Corp (APA). And as you know, following the money is what I like to do.

That’s why, while I think the dramatic boom we are seeing in the oil industry will eventually come to an end, right now it’s presenting a perfect opportunity to make some fast cash. And that’s what makes options so great because we can get in while it’s hot, and then take our money and run.

Right now, as the big names listed above pull back, I would look at adding them to your lineup. I think the industry will see another big push soon. So, take advantage of this current pullback and get prepared to cash in big.

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In the Spotlight: The Fed Effect

Everyone was on the edge of their seat as Fed Chairman Jerome Powell took to the podium. Here’s what he had to say…

Jerome Powell did what many people thought he couldn’t – he soothed volatile markets and pushed back against the chatter that the central bank could start to back off its easy policies.

On Wednesday, the Fed actually boosted its economic growth outlook, but announced that it plans to hold off on rate hikes through 2023. It also warned that it expected to see higher inflation this year – but that the uptick would only be temporary.

Speaking to the press, Powell doubled down on his message that the Fed will not be moving away from its interest rates or its bond purchases for the foreseeable future. This alleviated many investors’ concerns that the Fed would soon begin to make decisions that would shake up the market even more.

And the market reacted kindly, with stocks rebounding across the board following this announcement. With that said, I’m interested to see how this decision impacts the market in the future and if we’ll see investors being more aggressive with their investments in the week to come. Regardless, I’ll be sure to keep you updated.

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