OPEC just met to discuss raising output on oil but was not able to come to a deal. Let me take this opportunity to discuss the price of oil and how that affects finding good stock investments. They are very closely tied together right now, but in sort of a weird kind of way.
The oil market has a huge impact on the stock market for a number of reasons. But it doesn’t directly correlate. That means you can’t assume just because oil prices go one way that the stock market will go a specific direction.
Here’s what I mean by this. If oil prices go up, some investors will see it as a bad thing. That is because it will cause gas prices to go up and it will eat into the disposable income of households and consumers. They have less money to spend on other areas of the economy. That’s not good for stocks.
If oil prices go up because of high demand to fuel economic growth, then that will be good news for stocks. They will see that the world needs more fuel to produce more and sell to the international markets. This will cause stocks to rally.
The best thing that can happen for stock investing is increase in oil supply. That means price of gas will go down and there will be more supply to fuel growth. So everyone is watching OPEC, because if they are able to increase output, this will be good for stocks.
If you want to invest directing in oil, there is a better option than buying up barrels of the stuff from the Middle East. You can simply invest in an oil ETF from your stock brokerage account. It’s convenient and accessible to the average, retail investor. If you are a fundamental investor, you can use the current news trade oil.