MENU

Why oil prices are surging higher

So far this week it certainly has been a positive period for global oil prices.

According to Bloomberg, WTI crude oil rose 3.4% during the U.S. session to US$65.58 a barrel and Brent crude oil lifted 3.5% to US$71.05 a barrel.

This means that oil prices have risen over 5% over the last two days and has the Brent crude oil price at its highest level since 2014.

Why are oil prices lifting?

Oil prices have been on the rise after news broke confirming that President Trump has cancelled his scheduled trip to South America in order to focus on the U.S. response to developments in Syria.

According to CNBC, Trump has met with military officials in the White House this week to discuss whether any action would be required in response to an alleged chemical weapons attack carried out by Syrian President Bashar Assad’s government against its own people.

The fear is that any action taken by President Trump could interrupt crude supply chains and make it difficult for producers to ship overseas. With the global economy growing strongly, demand for oil has been rising and inventories could be eaten into meaningfully if supply levels drop.

Which would be positive news for Australian energy producers such as Beach Energy Ltd (ASX: BPT), Oil Search Limited (ASX: OSH), Santos Ltd (ASX: STO), and Woodside Petroleum Limited (ASX: WPL).

But it wouldn’t be positive news for all companies on the local share market.

Global airline shares tumbled sharply overnight in response to rising oil prices. This could mean that the shares of Air New Zealand Limited (ASX: AIZ), Qantas Airways Limited (ASX: QAN), and Virgin Australia Holdings Ltd (ASX: VAH) come under heavy selling pressure themselves during trade on Wednesday.

Considering the current outlook on oil prices, I would be favouring energy producers ahead of airlines at this point.

The Richest Man Alive Invests in This Instead of Airline Shares

The richest man in the world has just launched a $100 million investment fund and investors who don't take note could miss out on a massive opportunity.

And it isn't by sheer luck. He did it by looking to the future and investing in the big ideas of tomorrow.

This could be your chance to get in on the ground floor!

Click here to discover more!

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.