Many previous articles on this site have detailed the appeal of oil and natural gas securities ranging in size from ExxonMobil (NYSE: XOM), the largest with operations spanning the globe, to Mondial Venturies (OTC: MNVN), a small cap operating in the legendary oil country of Texas. The stock market performance of many of these companies has proven the value of those entities as investments. United States Natural Gas (NYSE: UNG), the exchange traded fund for natural gas, is up more than 27 percent for 2014 (chart below). United States Oil (NYSE: USO), the exchange traded fund for oil, is up nearly 12 percent for the last quarter of market action.
The recent Obama Administration decision to put off the decision on The Keystone Pipeline will help to keep the market strong for oil and natural gas stocks, exchange traded funds, and other securities in the sector.
The stock market has naturally reacted to that decision. That explains the performance of securities in the sector. It also shows why the outlook is so promising for ExxonMobil, Mondial Ventures, United States Oil, United States Natural Gas, and others in the industry. Investors realize that the energy group is one of the most promising.
What contributes to that is increasing demand from around the world.
The two most populous nations in the world, China and India, are expected to experience strong growth. That will increase the demand for oil and natural gas greatly. In theory, increased production from The Keystone Pipeline would reduce the price. But that will not be happening until well into next year. It looks more probable that it will not happen until Obama leaves office.
That does not diminish the long term appeal of energy stocks.
If anything, it increases it. The more demand from around the world, the more the price will rise for United States, Mondial Ventures, ExxonMobil, and others in the energy group.