Crude oil prices fell in July and early August, according to an August 12 report from the International Energy Agency, reporting that “weak OECD refinery runs in June offset concerns about escalating conflicts in Iraq, Libya and Ukraine.”
The IEA has lowered its global oil demand growth forecast for 2014, based on “lower-than-expected 2Q14 deliveries and a weaker GDP outlook from the IMF,” though it expects demand growth to “accelerate” in 2015 as “the economy improves,” and thus has raised it “baseline demand estimate for the year.
In a recent blog post by Russ Koesterich, the chief investment strategist of BlackRock argues that oil supply is likely to remain controlled, but that oil demand will continue to grow. So what does this mean for energy investing? According to Kosesterich, sticking with energy stocks even if oil prices don’t rise is probably a good idea.
“In short, oil prices still matter. And depending on the trajectory of events in the Middle East, this may come to matter quite a bit,” according to his most recent Market Perspective blog.
Kosesterich writes. “Currently, oil prices remain in a somewhat precarious balance, supported by a long-term rise in North American production, but at the mercy of falling production and exports in much of the Middle East and Africa.”