The Global Energy Crisis Reaches Its Peak. Here’s How to Trade It

by | Oct 15, 2021 | Stocks

Current headlines have been warning investors of a coming catastrophe that could have a huge impact on the stock market once the fast-approaching winter months hit: the global energy shortage in 2021. 

In fact, the ongoing energy crisis is already making waves in the market.

After OPEC confirmed it won’t increase production, oil rose above $81 a barrel for the first time in seven years. Some analysts are calling for the price to move even higher, to $90 or even $100 per barrel, if we experience a colder-than-anticipated winter.

And if I’m being frank, I expect oil to go as high at $150 — especially with the kind of year (or two) it’s been. 

At the same time, we’re seeing natural gas trading at multi-year highs — up 47% since August — while there’s a shortage of it.

The craziest thing about this disastrous situation we’re in is that the Fed had the opportunity to avoid all of this. The Fed had the chance to act and get ahead of this energy crisis and rampant inflation, but it did nothing but list reasons why rates wouldn’t get raised and turned a blind eye to the obvious inflation.

To make matters worse, the Fed is losing respect and credibility across the globe due to the embarrassing ethics scandal of questionable trades that’s been dominating the news.  

It’s absolutely shameful.

To be perfectly honest, I expect an entire new board of Fed members to replace the current ones within the next six months or so.

As investors that are dependent on a recovering economy, this situation feels similar to being on a bus speeding down the highway without a driver — things can only get worse.

And that will likely be the case with the global energy shortage in 2021.

The Global Energy Shortage in 2021 Could Get Worse for US Investors

The coal supply in Europe and China is quickly running out… and winter is coming….

Let me say that again: The coal supply in Europe and China is running out. China is already experiencing rolling blackouts, and the incredibly coal-dependent India has about 63 of its 135 coal-fired power plants relying on less than two days’ worth of supplies.

And it’s not like they can just turn to heating oil to warm up their homes when the cold creeps in.

Oil refineries can only produce either unleaded gasoline or heating oil at one time.

Do you know what that means?

When there’s a shortage of gasoline — like we saw earlier this summer when COVID-19 disrupted the major supply chains — refineries delay switching over to create heating oil for the winter. Normally, the switch happens early during the summer.

Except for this year.

That’s why I’m telling everyone to be bullish on the energy sector through the winter.

If I were a first-time trader in this environment — yikes — there are still a few ways I’d be able to take advantage of the energy market.   

Keep in mind that there are different levels of risk tolerance and timelines. However, speaking broadly, companies that deal with energy drilling — which are more volatile than traditional oil companies like BP plc (NYSE: BP) and Exxon Mobil Corp. (NYSE: XOM) — is the smart way to go.

Traders need to look at smaller drilling companies that look for oil and natural gas — or produce it through fracking and shale — because when these stocks start trading north of $50, they begin making people a lot of money.

If they start trading north of $100, then the moves from there will be astronomical… In fact, these companies are some of the most undervalued stocks on the market.

And that’s why every trader on Wall Street needs this stock in their portfolio before November hits…

Check out the video below to learn more about this stock, the global energy shortage in 2021 and everything else WealthPress Senior Strategist Roger Scott and I covered. 

Send any trading questions to jeff@joyofthetrade.com and stay ahead of the markets, especially these choppy ones, by subscribing to our YouTube channel.

WRITTEN BY<br>Jeff Zananiri

WRITTEN BY
Jeff Zananiri

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