Brent crude prices currently sit at $48.38, and while prices are not as low as they were back at the start of 2016, they still remain well below their previous highs before the market corrected in 2014.
The primary reason why oil started to fall is the high volume of oil that has been produced in the U.S. The shale boom created a scenario where the U.S. was far less reliant on big Middle East oil producers for its oil needs.
AS a result, OPEC has been put in a position where it has less overall influence on oil prices, and nations within the group have struggled to reach a consensus on production cuts in order to boost oil prices.
Now it appears as if Saudi Arabia has decided that enough is enough, and is trying to do its best to give oil prices a boost by cutting back on exports to the U.S. According to data from the U.S. Energy Information Administration, U.S. imports from Saudi Arabia fell to just 524,000 barrels last week. To put that number into perspective, it is the lowest level seen in the last seven years, and down 34 percent in comparison to the first six weeks of the year.
It would be naïve to assume that the recent dip in imports will automatically lead to higher oil prices, but the trend is clear, and if imports remain around the current level oil prices are likely to move higher during the latter part of the year.
As recently as May, Saudi’s oil minister, Khalid Al-Falih, said to expect imports to drop “measurably”, so there is reason to expect the trend to continue, and oil prices to move higher going forward.
Assuming oil prices are about to move higher, here are five oil and gas stocks that are worth picking up ahead of the rise.