This time the entire world is going through its worst phase of Coronavirus pandemic. And the stocks of every oil asset across the globe is a gradual fall. Now the biggest question asides that should investors invest in these?. They really want the answers to these kinds of questions. Whether the decision of investment in crude oil and buy stocks this time, good or bad. Almost all the stocks of the oil industry have been plugging in the fiscal year 2020.
Answer: According to my point of view, the answer is No, in most of the cases. Yes, there is also an immense opportunity on the part of investors to have profits during times of uncertainty, but the oil and gas industry is just a minefield for the investments. Until and unless the risk/reward profile becomes improved, it might be better to stay on the sidelines.
Facts and figures ( in percentage): If we have a look at the proxies of the industries like SPRD oil and Gas Exploration & Production ETF and the SPDR Oil and Gas Equipment & Services ETF, then we would observe a down of 50.5% and 67.9% in these sectors.
It’s the intuitive approach that we should not have any investment in crude oil. The reason behind that is it’s a time of down markets all over the world.
It would not be a wisely taken decision at all to buy and invest in crude oil stocks this time.
We asked a fuel and energy associated producer, is this a good phase to buy crude oil’s industry stocks?
We have to understand what they think and more significantly, why they do so.
He replied: Absolutely not.
According to his point of view and perception, he said that surely we can perceive the situations and conditions of some economic activities after some months from now but it cannot be correctly predicted that what the crude oil industry would be seen like a week from now and much less a year from now.
There were also some of the other contributors in the fuel and energy industry. Some of them had negative answers and some of them had positive.
Is there any crude oil stock worth buying?
Generally, in the current phase, the Investors would really wish to stay away from crude oil companies engaged in Associated oil production.
An enterprise of crude oil industry like Occidental enterprise, it might be looking as enticing because its stock price is going down by 75%, but it is doing endeavors to spend billion dollars typically to survive, and it could be 2021 before oil prices have risen above production costs, much less become a lucrative business strategy.
Expectations of recoveries
There are also other oilfield services enterprises that might not sell oil and crude oil, but they are counting on manufacturers to make a living. That means they’re going to suffer some of the losses plus they are also getting stuck potentially and waiting on a law court on bankruptcy matters to award them payment from customers that become fully insolvent. If we talk about the recovery of situations then I think that the recovery could be a long time rather than the expectations of investors along with the expense of missing out on the opportunities outside the crude oil patches