The US is the largest consumer of crude oil in the world, guzzling 20 million barrels every single day. (China is in second place at 12 MBPD, while India and Japan tie for third at 4 MBPD). The US economy also remains healthy and is forecast to grow by 2-3% this year. Demand for crude should outstrip supply once again in 2018. Add in a tight labour market domestically and political uncertainty in the Middle East and you get a potent combination for higher crude oil prices. From a low of $26 in 2016, oil has shot up to $70/barrel for West Texas Intermediate. Commercial traders are also, unusually, on the wrong side of this market and quite heavily short, which will add fuel to the fire. It's a bull market in WTI, which should also lead to higher prices for XLE, an ETF of shares tied to the energy sector.
I lowered the equity allocation in my Active Asset Allocator strategy from 20% to 0% on 2nd March 2018 and am patiently waiting before I make my next move. Meanwhile, after a few months rest, Gold Trader is firing up again. Get in touch to find out how you can make low-risk, tax-free profits and only pay fees if you make money.
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