Oil prices have already impacted the energy sector quite a bit, which has been brought on by Saudi Arabia defying logic by not cutting oil production. While things might seem bad for the energy sector, which has been consistently losing jobs and contracts for over a year now, things easily could get much worse. A lot of Wall Street’s top investors and financial gurus are now at a point where they know it is going to be bad, but now the guessing game involves figuring out just how bad it will get.
Oil Prices Can Fall Even More
Carl Icahn, a billionaire investor, said that he thinks oil prices could fall even more due to the fact it began picking up once again. A lot of investors, according to Icahn, did not think it would be this bad since the Middle East and Saudi Arabia have continued to produce oil at record paces. He said that this is also a political issue as well as a secular change, and it could easily get much worse than it already has for the energy investment department. On Friday, West Texas Intermediate crude oil fell once again to close at $35.36 a barrel and many dealmakers expect prices to fall even lower in the coming months.
Howard Marks, who is the co-founder of Oaktree Capital said that the future of the price of oil is not something you can comment on intelligently. Even the Blackstone co-founder and co-CEO, Steve Schwarzman said that there is going to be more pain coming in this area. He added that even though he is not an energy expert, he expects it to get worse. Dealmakers are all unsure of where the oil prices are going to bottom out at, but most of them agree that the bottom has not hit yet. This means that oil prices will likely end up around $30 a barrel or possibly a little lower.
The restructuring going on and the bankruptcies are going to grow in 2016, at least that is the consensus at this point from the dealmakers. There are a lot of energy companies in the United States that are under a lot of pressure. While there might be quite a few jobs lost because of the low oil prices, all of this is going to make for some amazing investment opportunities. There are a lot of distressed-debt investors who have been trying to come up with ways to generate some returns after the financial crisis from several years ago.
David Rubenstein, the co-CEO of Carlyle Group, has said within the past week that it is highly possible the best investment opportunities in the energy sector are ahead of us. Bonds have been going up and down, some going down to $60 from $90, but stellar energy investment opportunities are definitely going to be a thing of the future if oil prices and production stay near where they are now. As the oil prices continue going down, a lot of experts predict that $30 for a barrel of oil is not too far out of the realm of possibilities. OPEC has been maintaining the same production of oil even though there is a huge supply glut going on globally, which means that no one seems to be wanting to slack off on production. For countries like Saudi Arabia, the leaders feel that cutting back oil production will knock them off being the top oil producers in the world, which would allow someone else to come in and take that number one spot. Oil production does not look like it will calm down anytime soon from anywhere, but definitely will not be stopping from the Middle Eastern countries like Saudi Arabia.
So you might be wondering what all of this means? Well if you are someone who is investing into the markets, right now and the coming months look to be hot for energy investment opportunities. If prices go lower then look for more energy investment opportunities, especially if oil does go around $30 a barrel. Whichever way you look at it, the investment opportunities in the energy sector are booming.