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Oil Update—April 2020

Given the extreme oil price volatility these past few months, I am glad that I did not forecast any price ranges. There are way too many fast-moving parts that are poorly understood. I do not know that anyone can provide any guidance at this point with any confidence. That said, I do expect volatility to subside somewhat.

I am not providing any investment advice or guidance. You and your financial adviser are responsible for your own investment decisions and actions. That said, I encourage you to consider oil companies that possess financial and managerial strength to weather the current storm.

With the benefit of hindsight, I expect that the prices of many oil stocks bottomed in March. But I am not ruling out further downside or a new bottom in the coming months. In the short- to medium-term, however, increased testing and better treatment are likely to damp the negative effects of COVID-19 before a final vaccine is available for everyone. And in two, three, or four years, I expect that we will look back at this period and wish we had increased our exposure to the oil sector.

This downturn in the oil industry is the most severe that I have ever seen. Many companies simply will not survive. So again, I want to stress that long-term investors should pay attention to those companies that can withstand an extended period of low oil prices.

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