In an efficient market, the forces of demand and supply control prices. This has always been the case for nearly every market you could think of. But not for the oil and gas market. In oil and gas, investors always looked at supply to gauge the likely direction of oil prices in the coming days, weeks, and months. This is because demand has always been there.

Globally, the oil industry never seemed to meet the demand for energy. And with other energy sources trailing the oil and gas industry for several decades in terms of market share, oil has continued to thrive through thick-and-thin.

In fact, every major oil price plunge can be liked to a global financial recession, which basically affects the purchasing power of countries and their residents. So, it’s never really been a case of people not needing or wanting to buy oil and gas products.

Is oil losing its ex-factor?

That has been changing over the last few years with renewable energy sources gaining traction while oil deposits gradually get depleted. Even some of the world’s oil-rich nations like the Kingdom of Saudi Arabia have started to diversify their wealth by investing in alternative industries.

Notably, the country’s biggest oil producer Saudi Oil Company recently went public via an IPO at the Tadawul Stock exchange. Saudi Arabia plans to invest some of the money in Silicon Valley startups. This is part of a wider project that the country is undertaking to minimize its reliance on oil. This comes amid fears that demand for oil will start to diminish during the current decade.

The global consumption of fossil fuels is seen slowing significantly in the coming years as more people and governments become more cautious on climate change. While western Europe has been leading the line in the adoption of renewable energy, the US and the rest of the world is catching up pretty quick.

Some of America’s largest tech companies including Apple Inc., Google and Microsoft are already investing in clean energy by buying renewable energy certificates (RECs) from producers. Some analysts say this is just an attempt by the companies to present themselves before the public as clean energy-friendly. But in essence, it does a lot in driving the campaign to adopt green energy sources for power supply.

How do you invest in the oil and gas market now?

There is still some time left to go before we can confidently say that the world can operate independently of fossil fuels. In fact, it could be several decades before renewable energy overtakes non-renewable energy in terms of global usage. This means that there is still a window to invest in the oil and gas market.

But if that is too risky for you, then there is always the option to invest short-term, which can be done through trading. And while trading poses its own risks, technological advances have enabled experts to create intuitive trading applications that help them to pick the right moves. This can also be used for passive investing by those who prefer minimum interaction with the market.

Conclusion

In summary, the oil and gas market is going through a period when more people are becoming environmentally conscious. The black gold as it is famously monikered appears to be losing its shine, and with it is safe-haven status.

Today, when global markets are on a meltdown, oil prices tend to follow. A case in point is the recent collapse of global stocks due to the coronavirus outbreak. Oil prices have since plummeted.

And while stocks recovered on Tuesday following China’s announcement of a stimulus package to contain the economic exposure to uncertainty caused by the virus, oil prices remain rooted to the bottom. The WTI crude oil closed on Tuesday below $50.00 per barrel, the lowest level in over a year.