It is once again time to start thinking about what some of the major market themes are going to be in the year ahead. In previous articles, we’ve highlighted some of the ETFs that we have been buying in the energy sector, which have mostly been centred around exposure to oil services, energy production and uranium. We believe that given the supply dynamic in the oil market, oil, natural gas and energy in general are going to be big themes in 2021. Therefore, in this article, we are going to take a closer look at the energy market, and one individual company that we think is going to benefit from a return in energy demand as the world comes out of the global Covid-19 slowdown.
Let’s start with oil. As always, prices are driven by supply and demand. This is no real surprise as this is how the price, or value of just about anything, is determined. At present, demand for oil is very subdued due to the impact that the Covid-19 pandemic has had on the global economy. Countries locked down and traditional economic activity ground to a halt. This created an abrupt and drastic reduction in the demand for oil, with some spectacular consequences. We saw oil futures contracts trade at negative prices. Traders were forced to pay others to take oil off their hands in a bid to avoid the storage costs associated with keeping millions upon millions of barrels of oil in container ships, floating around the world because there was just simply nowhere to store it.
We think, though, that as we humans start to develop herd immunity against Covid-19 and the progress being made towards an effective vaccine and the global distribution thereof, demand for energy – and specifically oil and natural gas – will rebound in the coming year.
Continue reading your story on the app
Continue reading your story in the magazine
SO, WHAT NOW?
AS WE PUT 2020 BEHIND US, 2021 ISN’T EXPECTED TO LOOK MUCH BETTER (THOUGH A LITTLE).
The outlook for SA's four popular investment instruments
As 2020 draws to its bitter close, some respite may lay ahead for local stocks and bonds. The drive to list a diversified basket of offshore-focused exchange-traded funds will likely continue unabated. And the rand? Lest we burn our fingers in ever predicting our volatile currency.
MAKING BAD (INVESTMENT) DECISIONS IN A PANDEMIC
Many investors fell into the trap of either selling stocks at depressed prices during the March market rout, or cashing in their pensions.
Goodbye 2020 ... Hello 2021
Schalk Louw shares his outlook for the largest asset classes available to local investors.
How Has The Covid-19 Pandemic Affected The Inflation Outlook?
Due to deglobalisation and higher commodity prices, inflationary risks are increasing worldwide.
How Technology Influences Politics
Advances in how we communicate will continue to create opportunities for those who want to sow division.
On margin
The curious case of the US elections
Introducing Refined Ruggedness
The Ford Ranger Thunder exhibits double-duty dexterity off- and on-road.
Medical Schemes' Healthy Reserves Underpin Lower Premium Increases
The medical aid scheme industry is faced by stagnant membership as South Africans suffer from economic headwinds. Nevertheless, schemes are well positioned to buffer the effect of Covid-19.
Emerging Markets … And Trends
As developing nations navigate their way through the worldwide pandemic, there just might be some investment opportunities starting to emerge, writes Jaco Visser.
