Never mind what’s happening to the price of gold and other industrial metals and materials, Dan Dicker, president of MercBloc and former oil trader, says the price of oil is going to stay strong. In the attached clip, Dicker explains the case why crude oil is a safe bet now and offers a few ideas for how investors can profit.
Crude is the most stable of commodities
Unlike copper, steel and lumber, all of which are dropping in price, Dicker notes that there still isn’t any substitute for old school crude oil. It powers everything in our world rather than just construction or other discretionary products. Of course a drop in overall consumption can occur but unless a full scale meltdown of the global economy comes to pass, marginal demand for crude won’t disappear.
If you buy into Dicker’s thesis he says the way to play it is to look past the traditional dividend juggernauts like Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX). Instead Dicker suggests going with companies which “can monetize what’s going to be a very sticky, very high price of oil over the next couple quarters.” Dicker’s going with Exploration and Production (E&P) companies like Anadarko Petroleum Corporation (NYSE:APC), Apache Corporation (NYSE:APA), Noble Energy, Inc. (NYSE:NBL) and EOG Resources Inc (NYSE:EOG).
You can see the full “Breakout” segment below:
Related: iShares Dow Jones US Oil & Gas Exp.(ETF)(NYSEARCA:IEO), Market Vectors Unconventl Oil & Gas ETF (NYSEARCA:FRAK)