Oil And Gas Price Fluctuation Explained

The oil and gas investment industry has its fair share of booms and busts owing to the heavy volatility of oil and gas prices in the international market.

According to oil prices history at times earnings are all time down for companies and at times the same companies make record profits. There have been companies which have needed to decommission about 2/3 of their oil rigs and some which had to cut investments for exploration or production. Also a number of companies have filed bankruptcy and about 250,0000 of oil workers since 1990 have lost their jobs in the sector.

But that doesn’t mean everyone who invests in oil and gas has to suffer. There have been instances and quite a lot of them which talk about investors making it big with simple investments in the field only.

The reason?

Oil and gas have a very high price volatility and this often occurs due to the changing prices of oil barrels. According to numerous studies it has been discovered that there have been statistically significant positive trends in price volatility for natural gas and oil and these price surges also amount for great economic interests as well.

The new normal at the moment in oil price costs is USD50 to USD60 per barrel. This happens to be an aberration and experts expect the price range to return to an approx. of USD80-100 per barrel in a few months. And this will give us another major opportunity to cash on the investments made in the sector at the very moment.

For this year oil and gas price volatility, we’ll give you a very common example. Think about a snake in a drain. It wriggles up and down but cannot escape. This is exactly how the oil price movements are expected in this year- a very volatile wriggle that is tightly secured within limited bands. Although we’re expecting a higher price floor than the previous year but there is a massive possibility of extra supplies coming in through if the prices move well about $60. If the price persists from $40-60, this could be marked as an improvement for the year as compared to the last. So yes, the industry looks ideal for investment at the moment.

However you need to be ready for alternative realities for oil and gas prices. The US market offers variables which often work as wild cards when it comes to demand and supply for oil and gas.

The debt market is actually signaling confidence in floors and the markets are certainly open but there has been a dramatic fallout in the service yields of oil well which will become better if there is another wild card entry in the field.

According to experts, the downgrades are slowing and better predictions are being made for the oil and gas investment industry in the upcoming year. Its high time to invest and get better returns on your investments in near future because prices are rather affordable at the moment and nearing an incline soon.

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Texas Alliance of Oil and Gas Producers