Energy prices have fallen, but investors believe that oil stocks are still a good buy.

Oil prices have plummeted from recent highs, but there is still a case to be made for investing in oil companies, according to Bill Smead, chief investment officer at Smead Capital Management. This is because energy prices are expected to remain high or maybe rise further, he said on CNBC's "Street Signs Asia" on Thursday.

He called the drop in crude prices "the first substantial correction" in a bull market that began in the spring of 2020, following a price crash.

"You have this enormous move, you go from $20 a barrel to $120 and then you pull back — and now people are saying, 'Oh yes, that's all over, that'll fix the inflation right there,'" Smead explained.

However, he believes that multiple reasons indicate that prices will rise.

According to him, the United States must replace 180 million barrels of strategic reserves that were depleted to meet demand, and supply remains tight.

"What happens when China's economy fully opens... get through their quarantines and just get out?" he asks, implying that demand will rise again.

Covid flare-ups in China have prompted lockdowns this year, causing energy usage to fall in the world's most populous country.

When further movement restrictions are lifted, demand is likely to rebound.

"We like the oil stocks around here." "You can buy 'em here, and Warren Buffett is doing so," Smead added.

Brent crude futures and West Texas Intermediate futures in the United States both rose above $120 per barrel this year, but are now trading at $96.88 and $90.88 per barrel, respectively. Nonetheless, both benchmarks are more than 40% higher than a year ago.

Comments

Staking ETH on popular exchanges contributes to Ethereum censorship.

The use of censoring MEV relays by crypto ecosystems and exchanges is one of the most significant factors undermining Ethereum's credibility. Compliance with federal sanctions has a negative impact on the global reach of most crypto ecosystems. When it comes to Ethereum, however, investors wield significant power over the ecosystem's level of compliance. Almost 60% of all post-Merge Ethereum blocks adhere to US sanctions imposed by the Office of Foreign Assets Control (OFAC). While the crypto community is opposed to this transformation, many are unaware of their own contribution to helping Ethereum achieve total OFAC compliance. The use of censoring Miner extractable value (MEV) relays by crypto ecosystems and exchanges is one of the most significant factors undermining Ethereum's credibility. MEV relays, which are used by prominent crypto players such as Binance, Celsius Network, Coinbase, Kraken, and Cream Finance, act as a mediator between block producers and block build...

The Role of Traditional Banking in Today's Financial Landscape

In the constantly evolving realm of finance, traditional banking continues to play a pivotal role, shaping our global economic landscape. Traditional banking encompasses the services provided by banks that have been the backbone of financial systems for centuries. This comprehensive article explores the core functions of traditional banks, their historical significance, the challenges they encounter in the digital age, and how they are adapting to remain pertinent. It offers an insight into the role of Traditional Banking in Today's Financial Landscape, shedding light on its continued significance and evolution in the modern financial world. Furthermore, this article touches upon a related topic, which is the role of Private Finance in today's diverse financial market, providing a well-rounded perspective on various financial options available to individuals. What is Traditional Banking? Traditional banking refers to banks offering conventional financial services, such as savin...

Stop the decline, dollar bulls are back

The EUR/USD pair advanced early in the week but failed spectacularly at parity, finishing at about 0.9750 with a slight weekly loss. Wall Street reported massive gains and government bonds extended their gains from the previous week. Risk appetite boosts EUR/USD. Market participants believed a global recession would force central banks to slow quantitative tightening sooner rather than later. The RBA raised the cash rate by 25 basis points, less than expected, fueling speculation and demand for high-yield assets. Good vibes faded quickly. The euro began losing value Wednesday after the EU proposed more sanctions against Russia for its Ukraine invasion in February. Following the illegal annexation of Donetsk, Luhansk, Kherson, and Zaporizhzhia, sanctions were imposed, including a price ceiling on Russian oil and import and export restrictions. EU in trouble. Slow EU statistics rekindled fears of an economic downturn, dampening risk-positive sentiment. S&P Global revised September PM...

Search This Blog