How to Deal With the Oil Market Right Now

Shah Gilani

Oil prices are on the rise after OPEC+ renewed its commitment to production cuts for the year and Saudi Arabia independently announced a 1 million barrel cut of its own.

Naturally, a lot of people have been asking me if it's time to get in and start picking up direct exposure to oil through instruments like the United States Oil ETF (USO). And in a word, my answer is "no."

The thing is, the oil market overall is still extremely weak in terms of demand, especially from its three biggest consumers: the U.S., the EU, and China. If that trend continues, the momentary pop we're seeing in oil prices isn't going to last, despite OPEC+ trying to jack up prices by limiting supply. And you don't want to get into any investment when it's in the middle of trending downward.

But there is something you can do right now in order to set yourself up for a nice ride when oil does rocket back up, as it inevitably will do. And that is to open up long-term positions in oil companies that pay solid dividends, so that you're getting paid to hold the stock while you're waiting for them to appreciate.

Keep in mind, though, that not all dividends are created equal. You want to make sure you pick companies with solid profit margins and low payout ratios. The latter is especially important, because if they're using too much of their net income available to common shareholders on their dividend, that means there's not much left to grow the business or increase that dividend in the future.

If that sounds like a lot of legwork, don't fret - I've lined up some top candidates for you in my Buy This, Not That segment for this week. Just check out the video:

On top of these recommendations, you want to keep a close watch on what may be the biggest energy opportunity of the last 17 years - a buyout boom as major energy companies seek new land in the U.S. for drilling rights.

A colleague of mine has the inside scoop on all the movers and shakers in this land rush, and he's identified the five candidates with the biggest potential to be targets for a takeover, with the chance to double or triple your money in a month if you get in on the ground floor.

But you have to act fast if you don't want Wall Street to beat you to the punch. Get all the details here...

The post How to Deal With the Oil Market Right Now appeared first on Total Wealth.

Shah Gilani

About the Author

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Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.

The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.

Shah founded a second hedge fund in 1999, which he ran until 2003.

Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.

Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.

Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.

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