With the market all over the place, when is the right time to be buying energy stocks?
By Katrina Caruso
Since mid-2017, stock in companies in the oil and gas industries have been underperforming, and in the last month, major oil prices down by more than 10%.
Last week, though, the prices in Canadian energy began to rise. This led to the Toronto Stock Exchange’s S&P/TSX composite index going up 64.01 points on Friday, February 16. The United States has seen a similar irregularity in prices but also ended the week on a high note.
The gains in oil prices can be attributed mainly to the current geo-political climate in Iran, Iraq, Saudi Arabia, and Venezuela, though, there have also been concerns that more oil is being produced than the market requires. Nevertheless, OPEC members have said that they will do what they can to ensure that crude prices rise. Meanwhile, the US has been able to add more drill rig zones, which may contribute to a potential current cap on prices.
So, is now the time to buy?
Though prices rose last week (in Canada, we saw major gains with TransCanada Corp, which rose 1.9% on Friday), some investors are getting antsy because we keep creeping close to record-breaking lows for oil in the past decade.
Rob Lauzon at Middlefield Capital has said that it’s a good time to watch energy stocks, and that taking a long-term approach to investments is key so as to not be scared off by the current see-sawing market. Lauzon suggests waiting for stocks to get closer to $40 USD before pulling the trigger.
With the rises we saw last week, it’s hard to tell if that’s on the horizon. However, it may be unlikely that oil falls lower than $50 USD a barrel, according to BMO Market Analyst Randy Ollenberger.
Two things are for sure: investing isn’t for the faint of heart and it’s not for those with limited funds who need to see immediate returns.