With the global pandemic hitting us hard a year ago, everything became uncertain, having an adverse effect on the oil and gas market and nearly destroying them. However, with the vaccine coming out and being supplied to the whole world, 2021 came with hopes for a better year for the oil and gas sector.
Should You Invest in Oil and Gas Market in 2021?
Oil is essential in every industrial sector, be it manufacturing, refineries, fertilizers, cosmetics, and much more. The pandemic, however, caused a great loss to the oil industry when traveling became banned in the entire world, and the oil demand was brought to a halt. With people stuck at home, less automobiles frequented the streets. In addition, growing demand for green energy to replace fossil fuel has also contributed to the downfall of the oil and gas sector.
The good news now is that the oil prices are recovering and going back to normal. This signifies that the oil market will be bullish so that people can invest in it.
With the improved situation, the beta of oil stocks has seemingly increased. With President Biden signing off on the U.S. rejoining the Paris agreement, the chances are for renewable energy to grow.
An expert in the field, Tom Lee, former Chief Equity Strategist at JPMorgan has recently issued a note regarding the oil and gas market. He speculated that oil and gas stocks might incur a drastic surge in 2021, as the likes of Tesla. He believes that this industry holds great potential for investors and underestimates its true worth. However, looking at the way oil prices are on the rise, numerous fund managers will soon feel the need to invest in energy stocks and change the market dynamics.
Final Thoughts
When it comes to oil and gas investment, the risk and rewards involved are both quite higher as this is a highly volatile market. Keep in mind that oil prices are directly proportional to oil stocks, so stocks are expected to go up when prices rise. However, there are several external factors and influences that come into play and result in fluctuations in the oil market. The oil and gas market can be an exciting sector to explore investment opportunities.