With oil output increasing in regions of the world which have typically been oil importers, such as the United States, expectations for oil demand growth have continued to outpace supply on a global level.
The Organization of the Petroleum Exporting Countries and other oil producing nations such as Russia which have banded together, have all agreed to cut output in an attempt to keep oil prices elevated to the applause of oil producers around the world.
That said, headwinds relating to everything from environmental lobbies to electrification are harming the medium- to long-term outlook many investors and analysts have for oil producers, and rightfully so.
Output is likely to continue to increase into these pressures, and assuming these trends continue (and they certainly have the legs to do so, in my opinion), the oil sector in general will continue to be one to be avoided, on the whole. If the medium-term predictions of Wall Street banks hold true, oil could hover around $55-$60 for quite some time, not necessarily a boon for investors looking for a payday.
That being said, this overly direct pessimism which I tend to share with many market participants has led to opportunities for value investors to pick up companies which are run very well at very deep discounts. I would caution value investors to avoid the trap of avoiding the oil and gas sector altogether, as a number of very attractive opportunities may get even more attractive in the quarters and years to come.
Invest wisely, my friends.
