Industry forecast
Oil prices are affected by several factors; domestic, production, weather conditions, worldwide supply. The cost of oil is an excellent picture of the demand and supply in a given period. How weather affects oil prices; a harsh winter affects the demand for oil. This is because they will use more of both oil and gases to warm up their home temperatures, and if the temperature is hot, the demand for oil is low, for the usage is minimal.
The U.S. Energy Information Administration (EIA) forecasts low oil prices going into 2020, reasons being the rising oil inventories and uncertain global economic growth. As of October 2019, the EIA forecasts Brent spot oil prices will average $60 per barrel for 2020, $2 per barrel lower than its previous forecast. Investors looking for energy stock investments would do well to focus on top performers positioned to outperform in both up and down markets. The five top projected energy performers for 2020 are; EOG Resources (EOG), premium site driller, Royal Dutch Shell (RDS-B), oil behemoth, Enbridge Inc. (ENB), a pipeline company, NextEra Energy, Inc. (NEE), renewable electricity, Enterprise Products Partners L.P. (EPD), midstream energy services. The five companies were chosen based on their past trends, company positioning, and the company’s diversification.
Conclusion
The oil industry is an important industry that determines almost every other industry operations. Although the once-powerful cartels are not as powerful as they were, to control the price, the companies are still in control of the costs.