Investing Ep. 2: Crude Oil Analysis | BeatTheBush

How and when to invest in crude oil or gasoline. Disclaimer here is that there are just some of my personal ideas, you should seek your financial advisor to determine if investing in oil or the fund I recommend is right for you. Ultimately, this is a financial asset and it may increase or decrease in value. In this video, I propose some points to consider when predicting the future prices.

How’s it going everybody this is beat the bush today we’re going to look at how to indirectly invest in crude oil a little disclaimer here whatever i recommend you really need to check with your financial advisor before you go buy or sell anything i’m presenting a lot of information here and you can process it yourself and decide if you really want to buy something

Or not because this is an asset it is the stock market which will either appreciate in value or depreciate there’s no guarantees here now investing in a commodity is kind of difficult because you have to have a special type of account and not just a regular brokerage account so i just use my regular brokerage account and buy an energy etf called ixc which tracks the

Energy index it has a lot of different companies in it that it’s gasoline related oil refining related so it somewhat tracks the price of crude oil pretty well so it’s a pretty liquid so i can buy and sell it anytime i want and that’s the preferred method for me so to cut to the chase i actually bought some ixc and the rest of this video is really about analyzing

Crude oil and kind of projecting where it’s going to go in the future of course we really don’t know where it’s going to go so this is just an analysis and i’m going to give you this information and you can decide on your own crude oil was hovering around $100 a barrel and now it dropped all the way down to thirty one of the major factors is that the u.s. is doing

This hydraulic fracking thing we’re in a really long time the united states hasn’t really produced any oil for a really long time and all of a sudden it’s pumping all this oil into the market and is essentially over supplying the market take a step back and we gotta understand that crude oil actually makes gasoline which is the major component it also makes jet

Fuel and it also makes a lot of different plastics that we use everything around us that’s made out of plastic on top of that they direct chemicals out of gasoline and is actually in a lot of our foods yes we actually eat some of the crude oil so now we know we have a lot of demand for because it goes in everything that we even eat or use the world population is

Increasing and so there’s always going to be a higher and higher demand of crude oil if you just look at the world population is going up therefore the demand for crude oil is going to go up as well kind of looking something like this the thing that note is if you draw a line of supply over this land line of demand if it’s over there’s over supply if it’s under


It’s under so climb tends to look something like this it’s it gets over supplied under supply it try to hovers around whatever demand there is in the world and so in the crude oil industry it always goes through these cycles and right now it’s in this really terrible low down cycle and we’re going to try to take advantage of this by investing in energy so what

I think the cycle is right now is something like right over here there’s way too much supply because of the hydraulic fracking in the united states as well as i think iran’s sanctions are lifted so they’re supplying the world with oil as well before they weren’t on top of that saudi arabia actually noticed that the united states is pumping more and more oil out

There producing more and so they’re getting pissy and and trying to control the market they’re trying to squash out all the people that are pumping in the united states because it cost them a certain amount in order to the pump so then they’re purposely over supplying the market and making the price purposely low cause a whole bunch of oil exploration businesses to

Go out of business and so they would they would close down and so the supply would go down a little bit once they’ve squashed out the expensive producers of course the oil price is going to come back up the thing is my estimate is that it may not quite go back to $100 per barrel because once it goes back that high the us producers going to jump right back in and

Try to do the hydraulic acting again of course is going to leave a bad taste in their mouth because they they realize that if too many producers go in saudi arabia is just going to come back and oversupply the market again and squash them up so the people the banks that’s lending to these these companies that are doing the exploration they’re going to be a little

Edgy about lending to them because you know they kind of went through one time of defaults already so it’s gonna be a little bit higher it’s going to bounce back quite a bit before the hydraulic fracking can start up again one thing to note is hydraulic fracking has low amount of output compared to regular oil extractors they need to keep on drilling in order to

Get more oil i think we’re at this part here if it’s over the demand line it’s going to be over supplied which means it’s going to depreciate the price down once there’s not that much supply the price will come back up the time horizon for this investment if i think it’s about two to five years so you can think of buying into this as a way to hedge your gasoline

Price right now is cheap so you buy into it cheap when it increases you can then sell that asset and then pay for the expensive gasoline the thing is i don’t know where the oil price is going to go but right now is pretty cheap and i believe that it’s going to come back up at least it will recover a little bit one of the arguments against oil price coming back

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Up is because of electric cars if you have more electric cars will be less and less vehicles number of vehicles that uses gasoline and it doesn’t take all that much of less demand in gasoline in order to change the supply and demand curve if there’s just a little bit less usage there might be overproduction and hence the price of oil we kept will be kept low

My argument against that is the electric cars are not that big right now they may get bigger but i don’t think it’s get back it’s gonna be very popular just yet it’s just starting in a ramp up and it needs maybe five at least five years for it to really gain traction with most consumers if you factor in the price of the battery the total ownership of the car is

Actually more expensive to drive an electric car than a gasoline car of course there’s the environmental aspect you really want the electric car because it’s better for the environment but even that argument it’s a little off because some people argue well where do you get the electricity from how do you generate it at cetera unless you you know get all electricity

From solar panels which is not feasible let’s not go there the thing is i’m thinking the electric cars actually won’t get too popular just yet it will but you need a better battery technology which you know you can argue tesla’s doing the blah blah blah blah blah my argument is that yes it won’t it won’t come back up that quick and there will always be demand for

Oil people need gasoline to drive people need gasoline crude oil to make plastics people always need more plastic goods you see all the factories making all this stuff all there’s so many products that’s derived from crude oil and you can count on our need for crude oil to keep at its pace there’s not going to be that many things that can replace it you can talk

About like corn based plastics or something like that but those are not really replacing our core usage of crude oil just yet i believe ixc was hovering around $50 and then it kind of dropped along with crude oil all the way down to 25 and then it came back up right now it’s about $30 my projection is about a 50% increase in five years so that’s 10% a year roughly

And on top of that if you if you buy this stock do you also get about a 5% dividend 15% annual growth rate is pretty good for over on this short five-year term course i might be wrong a mine might actually go lower i don’t know that’s my gut feeling of after analyzing it and looking at you know the dynamics of everything weighing in electric cars weighing in what

Saudi arabia is trying to do i really think they’re probably able to do it they they’re playing hardball here because they’re staying firm with over supplying the market there they normally supply the market a certain amount they refuse to lower the price in order disable it stabilize the price saudi arabia used to be in that position where if the price fluctuate

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They would adjust their supply accordingly in order to stabilize a price but this time around they’re not they they’re really playing hardball and my thinking is that they’re playing hardball for a good reason and if i were in their position i probably do the same because if they know that if they oversupply the market they’re going to squelch out those hydraulic

Fracking business things and then they can enjoy a high oil price for you know years longer and if those ever come back online they’re gonna do it again you know it’s going to go up and down they need the crude oil amount to be a certain level in order to balance their their country’s budget now they have a good stockpile of money but that stockpile of money will

Run out if they extend this for too long so they can do it for a good duration five years maybe of pushing it low i don’t think they’re going to keep it low that long because i think if saudi arabia keeps their supply really high and the price of crude oil low for even maybe one more years those hydraulic fracking guys are probably going to give up and they can

Finally raise our price again it’s going to go trickle back up with those things in mind you can decide on your own if investing the include is a good thing or not for me i actually did buy some i xe my target for that is is for to increase by thirty five to fifty percent within two to five year time frame i hope this video is informative in that it’ll help you

Decide on your own if investing in crude oil is something that you want to do please don’t just take my word for it do your own analysis because there’s a disclaimer i had a disclosure before work don’t listen to me i’m only presenting the information here for you and you gotta also spot-check my information also because i’m kind of doing this hand waving thing

Oh oil here up down do your own fact-checking i’m actually personally invested in it and so you can see that i do believe in what i am saying so it’s about march 2016 right now i like to come back to this video two to five years from now and see if i’m actually correct in my prediction prediction is kind of fun so i did do my due diligence in order to try to minimize

The risks there it is an etf on which is a aggregate of many different companies not just one single company i am recommending one single ticker although that ticker is a combination a component of many different companies so the risk there is somewhat distributed but if oil crude oil prices keep on staying low which i think has a really really low chance of doing

You could lose value in whatever you invest so be aware of that i hope this video helps you don’t forget to click like comment down below if you agree or disagree to my analysis and don’t forget to subscribe over here thanks for watching

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Investing Ep. 2: Crude Oil Analysis | BeatTheBush By BeatTheBush

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