The sweeping moves by the Saudi Arabian crown prince to quash internal dissent has sent shockwaves throughout the Middle East and the world. The price of oil has reached above the $57 mark for the first time since January. There are very real concerns that the Saudi Arabian state will struggle to hold together over the course of its “reform” effort.
An upcoming meeting between OPEC members on November 30th also has the oil market intrigued. For now the production cut agreement between the countries is set to expire in March 2018, but the countries are expected to extend the cuts beyond that date. If this comes to pass oil futures could see another boost and perhaps threaten the $60 threshold before the 2018.
The Horizons S&P/TSX Capped Energy Index ETF (TSX:HXE) is a great bet going forward for investors who are confident that oil will remain bullish in 2018. The ETF was up 0.24% in late morning trading on November 10th and has gained 8% month over month. It reached above the $20 mark for the first time since May and if the spot oil price continues to show strength it could challenge the highs it saw in January.
Oil prices could continue to gain momentum due to the factors listed above. Tensions between Saudi Arabia and Lebanon have also heightened in the midst of the political transition in the former.
