Several factors are fueling a rise in crude oil prices right now. And we're just getting started on an extended crude price rally that will take us through the third quarter of 2019.
The price of WTI crude oil is sitting just below a 2019 high, near $56 per barrel. The same goes for Brent crude, which pushed to the brink of $67 per barrel.
Don't just take our word on it. Three major trends are driving oil prices higher. And that's excellent news for three major oil stocks that have just hit our "Buy Zone."
Buying these three energy stocks now, before the price of oil surges again, could be the key to double- or even triple-digit profits in 2019.
Here are those three trends – and the three oil stocks poised for major breakouts in 2019…
Supply Cuts and Sanctions Will Drive Oil Prices Higher in 2019
Three major trends are converging to push oil prices higher right now.
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First, OPEC and non-affiliated producers like Russia will cut daily production output by 1.2 million barrels per day (bpd). Those supply cuts will complement a reduction in exports by Saudi Arabia – OPEC's largest member – to Asia.
Second, North American producers continue to face bottlenecks in key producing regions around the continent.
Bottlenecks have curbed the flow of oil to refiners.
Railcar use has picked up once against due to the lack of pipeline capacity. An average of 718,000 barrels of oil are going by rail a day in the United States, a figure that is a year-over-year jump of 88%.
Although U.S. production is sitting at record highs, a glut is inevitable, but it's not coming until the end of the year, according to BNP Paribas.
Finally, the United States' sanctions on both Iran and Venezuela continue to weigh on the global supply and demand balance.
Just last week, consultants at FTI Consulting noted that even though Canada could pump more oil, the lack of transport will not reduce the market gap that has expanded.
Even though the United States pumps 11.9 million barrels per day, the U.S. imported 500,000 barrels from Venezuela per day (part of a broader import average of 7.9 million bpd). Meanwhile, Iran (which exported about 1.25 million barrels per day in January), is expected to see that figure drop under 1 million over time as sanctions weigh on the nation's economy.
BNP Paribas projects that U.S. oil prices will rise to an average of $66 by the end of the third quarter. The firm projects that Brent crude will hit an average of $73 in the months ahead.
Those double-digit percentage gains for oil will be felt in the pocketbooks of every American.
However, smart investors can get out of those oil price gains right now and make money on three stocks poised to break out in the coming months. And to find these stocks, we tapped into the single most powerful tool on Wall Street to identify wealth-building buys.
The Money Morning Stock VQScore™…
The Best Energy Stocks to Buy Now, No. 3:
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, and consultant with degrees from Northwestern, Johns Hopkins, Purdue, and Indiana University. He is a seasoned financial and political risk analyst, with a focus on stocks, hedge funds, private equity, blockchain, and housing policy. He has conducted risk assessment projects for clients in 27 countries, and consulted on policy and financial operations for some of the nation's largest financial institutions, including a $1.5 trillion credit fund, a $43 billion credit and auto loan giant, as well as two of the largest Wall Street banks by assets under management.
Garrett joined Money Map Press as an economist and researcher in 2011, specializing in alternative strategies with an emphasis on fundamental and technical analysis.