Current psychology in the oil market may reflect optimism, but it’s not going to last. That’s because the real risk for oil bulls is the fact that the United States is the new global swing producer.
As it stands, U.S. crude oil production is up 400,000 barrels per day since October, and it’s quickly approaching 9 million barrels per day. And this figure will only go higher following a surge in U.S. oil-drilling-rig activity, which is up a staggering 85 percent from the May 2016 low.
Additionally, U.S. oil inventories are at record-high levels for this time of the year. Plus, there’s a surge in investment into the U.S. oil patch. In fact, energy researchers at Wood Mackenzie predict U.S. oil investment of around $61 billion this year.
You read that right: $61 billion with a “B” in oil investment. And that’s for this year alone!
Mark my words: These forces will cap rally attempts in oil and ultimately turn prices sharply lower.
But now’s not the time to make a move in oil. When the time is right, you’ll be the first to know.
As far as the broader stock market goes, my cycle research and A.I. models indicate a pullback may be coming down the pike during the first quarter. So, now’s not the time to back up the truck for stocks either.
But as in any market, there are always opportunities. That’s why I want you to make the following adjustments to your working orders …
- CANCEL AND REPLACE your existing good-till-canceled order, using 3 percent of the funds you have allocated to the Materials, Energy & Ags section, to buy shares in Bunge Ltd., symbol BG, at $62.90 or better. NEW PRICE: $64.65 or better. When filled, place a good-till-canceled protective sell-stop at $54.89.
- CANCEL AND REPLACE your existing good-till-canceled order, using 5 percent of the funds you have allocated to the Materials, Energy & Ags section and buy shares in Caterpillar Inc., symbol CAT, at $84.00 or better. NEW PRICE: $88.90. When filled, place a good-till-canceled protective sell-stop at $73.61.
- CANCEL AND REPLACE your existing good-till-canceled order, using 5 percent of your funds allocated to the Materials, Energy & Ags section and buy shares in Boeing Co., symbol BA, at $140.00 or better. NEW PRICE: $150.30 or better. When filled, place a good-till-canceled protective sell-stop at $127.72.
I’ve priced these stocks so, on a pullback, they will be ready to go. And don’t forget: When the time is right, I’ll send you even more recommendations. There will be many new opportunities in this section as 2017 unfolds.
