Investment Opportunities and Industries Affected by Fluctuating Oil Prices
If you're interested in my content,please follow me!！
With oil prices continuing to decline, differing views on the outlook have emerged. On the one hand, the IEA believes the market will remain well supplied with the organisation expecting surpluses into next year even if OPEC+ production cuts are extended. However, with demand growth relatively robust, the expectation from
other news sources is that the cartel could actually deepen cuts to stem the price falls. JPM stated that spot prices are in line with JPM's long-term estimate, and the market remains balanced with likely equal risks to the upside and downside.
Although the future direction of oil prices is difficult to predict, what investment opportunities can we find when oil prices fluctuate?
Here are some of the main industries that may be affected by oil prices fluctuation:
Oil and gas industry: This is the most direct impact, as changes in oil prices directly affect the business revenue and profitability of oil and gas companies. When oil prices rise, these companies' profitability usually increases; when oil prices fall, it may lead to a decrease in their profits.
Airlines: The aviation industry is another industry that is greatly impacted by fluctuations in oil prices. When oil prices rise, the operating costs of airlines will also increase correspondingly, leading to an increase in ticket prices and a decrease in the number of passengers; vice versa.
Logistics and transportation industry: Oil prices also have a direct impact on the logistics and transportation industry. Rising oil prices will lead to an increase in transportation costs, which will put more cost pressures on businesses in this industry and may affect their performance.
Chemical product manufacturing industry: Most raw materials for the chemical industry come from petroleum refining products. An increase in oil prices will lead to an increase in the manufacturing costs of chemical products, reduce customers' purchasing power, and may affect the profit margins of the industry.
Automotive industry: An increase in oil prices will raise the operating costs of cars, leading to consumers turning to more energy-efficient car types. Therefore, when oil prices rise, low-energy consumption car models such as electric cars may become more popular in the automotive industry.
Overall, oil prices will have different degrees of impact on various industries. In the investment process, it is necessary to consider the impact of oil price fluctuations on different industries, as well as factors such as the profitability and market performance of related companies.
When oil prices fall, there may be investment opportunities in the market, including:
Figure: Brent price (US$/bbl)
Airlines and tourism stocks: Lower oil prices may lead to increased profitability for airlines, as fuel costs decrease and airfares potentially become more affordable. This may also benefit the tourism industry, as lower operating costs may lead to lower prices for travel and accommodations. As oil prices decline, JPM released a research report on Japan Airlines (9201) on December 1st, maintaining an 'Overweight' rating and noting that the airline's costs could decrease as a result of lower oil prices.
Renewable energy stocks: As oil prices decline, renewable energy alternatives such as wind and solar power may become more attractive to investors.
Consumer goods stocks: With lower oil prices, consumers often have more discretionary income, which can benefit consumer goods companies that sell non-essential products.
Economic sector stocks: When oil prices decline, it can often lead to increased economic growth. This may benefit sectors such as construction, infrastructure, and financial services.
Low-cost auto manufacturers: Lower oil prices may make fuel-efficient vehicles more attractive to consumers, which could benefit manufacturers that specialize in low-energy consumption car models like electric cars. On November 30th, JPM released a research report on General Motors, maintaining an 'Overweight' rating and raising its target price, noting that as oil prices decline, the sales of the automaker could be supported.
Overall, investors should consider their risk tolerance, investment goals, and the current market environment when evaluating potential investment opportunities during a period of falling oil prices.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
