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Oil Price Correlation Breaks Down in 2021
Historically, drillers would chase higher oil prices with more drilling rigs. In today’s capital starved market, high oil prices no longer draws more rigs. According to Rystad research, the industry has lost almost $300 billion of E&P investment since 2020, translating into ~6.3 million barrels per day of lost production by 2025.
Meanwhile, the EIA projects new record highs in global oil demand by 2022. If this scenario holds, and supply constraints remain in place, the world faces a structurally undersupplied market going forward.
Surges to Highest Level Since 2008
Record high valuations across stocks, bonds and real estate suggest poor future returns in the face of oil's capital starvation, creating the best buyer’s market for energy assets in our lifetime.
With inflation exceeding 5%, most traditional asset classes suffer negative earnings yields while direct oil and gas investing offers compelling returns and inflation-protection.
I had not previously invested in Oil & Gas projects but was particularly impressed with this company and the way they have simplified Oil & Gas investing and made it more accessible and practical to incorporate into a broader portfolio. I have been investing with them for several years now and am so glad I found them.Carl K., Long-time Investor
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