I don't usually do this, and it's doubtful I ever will again. But Asia is quickly becoming the center of global oil demand, and it's crucial that investors know how to profit. I recently showed my premium Energy Advantage members just how to do that – and they're already up almost 15%. But this shift is changing energy markets so fundamentally, I had to show this recommendation to you, too.
Our entry back into a range of U.S. oil and natural gas investments is awaiting the sluggish return of a workable production balance.
High-yield (i.e., junk) energy bonds now yield more than 20%, which is simply unsustainable.
And with oil trading in the $50s per barrel in New York, there will be another round of bankruptcies and consolidations in the sector.
This shakeup will make for some explosive plays.
But the current action remains on the demand side – which right now means Asia, where demand is concentrating.
In fact, the consumption of both energy as a whole and crude oil in particular are moving strongly to the continent.
Consistent indicators and analyses point toward this remaining the dominant trend for at least 20 years, if not more.
By the time we reach the next decade, India will be Asia's main "energy dynamo." But for now, China remains the primary driver in the region's demand.
And that brings us to our newest play…
We're Adding the World's Largest Refiner Back to the Portfolio
Today we're moving back into China Petroleum & Chemical Corp. (NYSE: SNP), also known as Sinopec Ltd.
It's already up almost 10% in the last month alone, but this latest uptick signals more than simply an improving outlook.
As the largest refiner and oil product distributor in Asia, as well as a government favorite, the environment is much better than when we last held it.
For one thing, Sinopec has become more of a regional player. That not only buttresses the company's outlook as Asia as a whole spiking on the demand side, it also allows this central player the option of cross-border hedging.
For another, as a recipient of significant support from Beijing, Sinopec has the additional leverage (provided by the authorities) necessary to overcome local regulatory and pricing bumps.
These Two Numbers Alone Make Sinopec a Buy
SNP has been receiving a number of analyst upgrades over the past several weeks. There are several figures I could turn to here to show the company's prospects, but one stands out above the rest…
The relationship between Sinopec's market cap, around $90 billion, and its roughly 1.2 billion outstanding shares.
The company's market cap is the single best reflection of its existing assets, working capital, and revenue.
And with both market cap and shares outstanding being high, individual shares end up being far less volatile.
Put simply, there are too many shares out there (and the company is t…
About the Author
Dr. Kent Moors is an internationally recognized expert in oil and natural gas policy, risk assessment, and emerging market economic development. He serves as an advisor to many U.S. governors and foreign governments. Kent details his latest global travels in his free Oil & Energy Investor e-letter. He makes specific investment recommendations in his newsletter, the Energy Advantage. For more active investors, he issues shorter-term trades in his Energy Inner Circle.