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Why Oil Stocks May be Good for Your Portfolio

Aug 17, 2007
Stock markets love a consensus, but the oil market is one where reaching any type of consensus is very hard to achieve. There is much battle going about oil stocks and related issues. Some expect stocks and bonds for oil and various petroleum products to keep rising. Some expect them to peak soon. Others expect them to go down in the not-so near future, but down nevertheless. So, who to listen to?

Regarding oil stocks, a fundamental that has to be understood about the oil market is that is it driven by the market laws of demand and supply. Demand for oil is on the increase slope. Economic recovery by major world players means that there is more demand for oil. Other emerging big players, like China, are in more and more need of oil, thus raising demand. Countries like China, India and South Korea are also into building their own oil reserves in prediction for increased need in their own economy. This in turn, leads to an increase in demand. However, while supply of oil is still satisfactory, it is however to be noted that there is a tightening of supply on the market. Added to this is the fact that experts are remarking that oil supplies are dwindling. Combined with the other pertinent fact that there is an absence of supply growth, it all leads to imply that supply may not be able to meet the requirements of demand in the future.

Since the price mechanism is determined by these market laws, what happens when demand exceeds supply? Prices go up. Needless to say, increasing prices mean increase in value of oil stocks. This is why it is a good idea to hold on to those stocks.

A number of stock investment and stock broking companies provide advice and handling of stocks portfolios. These qualified companies thus look into the screening, research, and analysis needed to ensure the best oil investment for one's portfolio and needs. However, in recent times, and especially due to the Internet, the layman can also attempt to invest on his own in oil stocks. Use of tools such as specialized web sites and business search trackers on the Web allow for screening and analysis of major market players. However, there is not much of a security net when one uses one's own counsel for investment. Careful analysis and diligence is thus the key for these transactions.
About the Author
Mayoor Patel is the writer for the website http://oil.oil-universe.com. Please visit for information on all things concerned with Oil Stocks
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