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Oil In 2013: Boom Or Bust?

Kierman added that crude supply issues will be a main focus moving forward, noting that Brent crude's resilience is the result of low spare capacity among OPEC nations and a risk premium caused by the potential for Middle East conflict, particularly between Israel and Iran.

A difficult year to predict

With such varied forecasts, it seems that the next year will be positive for energy consumers, but will have less upside for energy investors — especially those invested in the oil sector.

Being able to accurately forecast crude prices is challenging at the best of times — especially considering that making forecasts is so closely linked with tracking geopolitical events. The ongoing instability being experienced in the Middle East is likely to have speculators bidding up the price of crude futures, while at the same time oil prices are unlikely to see much upside if higher global production amid sluggish economic growth continues.

Many feel that on average, prices are likely to fall; however, as has been shown in the past, it only takes a single incident in an oil-rich region to completely disrupt all logical assumptions about futures.

If crude remains in its current range, investment opportunities will still exist. Companies that assist with production are likely to benefit from increased drilling while remaining relatively protected from price fluctuations, and refiners are likely to gain as infrastructure in the US develops on the back of plans to build towards energy independence.


Securities Disclosure: I, Adam Currie, hold no direct investment interest in any company mentioned in this article.

Oil in 2013: Boom or Bust? from Oil Investing News

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