Oil Supplies May Be at a Seven-Year High, But There’s No Glut

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Two days ago, big oil executives were hauled before a Senate committee and accused of collusion to boost the price of oil. The incendiary charge plays to voters back home. But as usual, Congress is off the mark.

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Over time – perhaps a very short time – the price of oil will increase

Two days ago, big oil executives were hauled before a Senate committee and accused of collusion to boost the price of oil. The incendiary charge plays to voters back home. But as usual, Congress is off the mark.

The fact is that demand is driving the high cost of energy today, not collusion or supply. How else can you explain this fact: U.S. crude oil supplies just hit a seven-year high, according to the federal Energy Information Administration. Yet, the price of crude is trading at $63 a barrel.

Unfortunately, the price of oil and other sources of energy will become more, not less, expensive, says Horacio Marquez, Advisory Panelist at InvestmentU http://www.investmentu.com and editor of the Money Map Advantage, a newsletter on international economic trends and emerging markets.

“Over time – perhaps a very short time – the price of oil will increase,” he said. “It may not be $100 a barrel soon, but it will happen. There’s enormous pressure on prices, from the Chinese in particular, to other emerging markets.

Although new sources of oil will be tapped over the coming years, the pressures in place now will accelerate.”

In fact, he said, oil stocks have yet to reflect this trend. They’re up just 3.5% in the last 12 months.

With the price of oil likely to rise sharply and the summer driving season at hand, Marquez is recommending oil stocks. “Under current conditions, oil is a good buy,” he said.

Investment U, an educational investment e-letter, brings dynamic market information to more than 300,000 subscribers (http://www.investmentu.com) each day. For more information about our editors, or to set up an interview, please contact Juan Muñoz at 410.223.2693 or jmunoz@investmentu.com, or visit http://www.investmentu.com

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