- Oil demand has already outpaced oil supply in 3Q20; continued demand strength as economies reopen will result in inventory drawdowns to near pre-COVID levels.
- US shale producers no longer a 'swing' factor for next 1-2 years owing to sharp drop-off in drilling during the pandemic. This is positive for oil prices.
- OPEC+ group's ability to reach middle ground is a positive signal for the market, as it avoids the worst-case scenario of a 'no deal'
- Oil price ETFs have proven to be poor vehicles for exposure to the commodity.
- Invest in a basket of integrated oil majors instead - their upstream segments account for the majority of earnings, making them good proxies to potential oil price upside.
For further details see:
Buy The Oil Majors As Proxies To The Recovery