Things have been crazy with oil recently which touched price levels below $30 per barrel. Some analysts believe that’s not the end of the negative trend and the prices may go down to as low as $10 per barrel.
Standard Chartered became the latest major bank to downgrade its oil outlook to $10 last month, joining the likes of Goldman Sachs, RBS and Morgan Stanley in making ultra-bearish calls.
However, there are also those (predominantly contrarian analysts) who strongly advocate to go oil long now in order not to miss the future bullish train. Hawkinvest, who like value, growth and contrarian investment approaches, are a good example and believe that it’s crazy to be short oil now. Here are their five reasons to go oil long:
Oil is down huge already and there simply is not that much potential downside left, especially when compared to the upside.
Major oil stocks have started to trend higher, which could be a big signal that oil is at or near the bottom.
Oil demand remains solid and investors should start thinking about the long term and what a sustainable oil price is likely to be in the future.
At less than $30 per barrel, there is far more upside than downside in oil prices.
Record levels of short interest in the oil sector confirms this is a very crowded trade, which could ultimately lead to a massive short squeeze rally.
Do you agree? Please feel free to share your comments below.
The information is for informational purposes only. You should always consult a financial advisor.