“We are still in the very early stages of coming out of an historic oil industry downturn which continues to be weighed upon by excess global inventories of crude oil. …
By Shawn Reynolds, Portfolio Manager, VanEck
While OPEC members and other participants in the quota scheme have shown good discipline in limiting production, US shale supply has surged in response to somewhat higher prices earlier in 2017 and a continuous push to lower well costs. As a result, the oil market is taking time to rebalance but, despite these challenges, we remain surprised by the skepticism that currently exists in the face of data that, we believe, is quite compelling.
“Even if U.S. shale oil is going to oversupply the market, this still implies that there are a number of E&P companies which will grow at very fast rates for a couple of years. We believe those will remain very good investments.
“One of the main pillars of our investment philosophy continues to be to look for long-term growth. Since we remain convinced that positioning for the future and not just reacting to current circumstances is of paramount importance, our focus remains on companies that can navigate commodity price volatility and help grow sustainable net asset value.