Oil price and the global economy
Oil underpins the global economy and so a low oil price should be good for the global economy. However, the global economy is out of balance and being manipulated. The global economy should be a free market but it is no such thing. It is a network of trade deals, monopolies and cartels.
Powerful forces in the world want a low oil price and so we have a low oil price. Why? Well, many terrorists are funded from oil revenues and we need a low oil price to support the weak economies. Cheap oil suits most governments at the moment. It is a temporary phenomenon, eventually, the oil cartels will make agreements and we the people will pay the price. The price being whatever they decide.
Oil company share prices are rock bottom except for the biggest of the players and so are worth looking at, but only if you are looking for a long term investment. Premier Oil dropped to a low of 30p a few months ago and then soared to 70p. It’s dropped back again now. In the short term it will be volatile but in the long term could be a great investment.
Oil explorers seem to have a lot of stored up value and I’m still very optimistic about Solo Oil which could show signs of improvement soon. I think they will make positive announcements on gas sales in Tanzania and on the oil at Horse Hill next month. Pundits on the forums are suggesting the share price could hit 6p this year. That would suit me!
Premier Foods share price is down at 38p way off the 65p that Nissin paid. There is stored up value there too and they should do exceeding well over the summer.
Verona Pharma made gains this week but 3.5p, they still seem under-priced. The worry is that even though they have a great new drug to market, will the market welcome it?
That’s it for this week. I think the stock market will be depressed and there will be less than obvious risks until we get the referendum out of the way. If the UK leaves the EU as a result, the market could go into free fall. There are dangers that well-known British companies could be snapped up by foreign buyers. Will the Americans buy Tesco? Will the Japanese snap up Premier Foods? Stranger things have happened.