One sector many Canadian investors tend to focus on, given the size and overall importance of this sector relative to the country’s overall GDP, is the oil & gas industry.
Still one of the country’s largest economic generators, despite a pronounced drop in the commodity price of oil, big oil & gas remains an area of focus for many Canadian investors who have thoroughly studied the industry for years and have made fortunes off of investing in companies that have ballooned over time.
The question of how much oil exposure an investor should hold in oil sands or natural gas operations remains a difficult one to answer, given the relatively volatile nature of the price of oil of late.
Briefly touching above $50 per barrel for the first time in months, the price of crude has continued to hover in the high-$40 per barrel level for some time now, and indications are that this commodity will trade within a reasonable band for the foreseeable future, with little chance of touching triple digits in the near to medium term.
That said, the potential for a continued, slow but steady, rebound in the global price for oil has investors considering whether now may be the time to consider some specific well-run Canadian oil companies.
The current rally in the Canadian dollar compared to the U.S. dollar has had an adverse affect on the industry as a whole, although a lower U.S. dollar has translated into a higher commodity price for crude (based in U.S. dollars).
Limiting exposure, while focusing on the most well-run companies, should be the investment strategy of choice for investors considering exposure to the Canadian oil & gas sector.
Invest wisely, my friends.
