Crude Oil Shoots Higher
Crude Oil Shoots Higher
When crude oil shoots higher, that’s good news for mineral owners! We’ve recently discussed how the price of oil is affecting mineral owners and what you can do about it (hint: not much!). With oil moving into bear territory and hitting multi-year lows, it’s easy to get discouraged with the outlook on the oil and gas market. Fortunately it’s not all bad news. Many minerals owners are still finding success selling mineral rights at US Mineral Exchange and the prices have pushed some buyers to get more aggressive!
On Friday, crude oil move up more than 7% to end the day! This was great news for mineral owners who are tired of seeing the price of oil consistently decrease over the last 6 months. There’s been a lot of speculation about why the price of oil jumped by nearly 8% on Friday, but regardless of the reason, the fact that oil is beginning to think about moving higher is a welcome sign. Over the last 6 months, we’ve seen oil drop with no end in sight. Once we hit the $45/barrel level, oil seemed to start stabilizing and we’ve been bouncing around that area for a couple weeks now. This had many oil and gas experts guessing if the bottom was in or if there was more pain to come. Ultimately, no one really knows where the price of oil will go. After crude oil shoots higher, the market is in a weird situation right where it’s trying to figure out the true price of oil.
For mineral owners, when crude oil shoots higher we may finally be seeing the end of the oil decline. While oil could move lower, it’s likely that the price is getting near the bottom at this point. Any move lower would likely be short lived. Does that mean the price is going to sky rocket higher? Probably not. The progression higher is probably going to take some time as rigs begin going offline and the existing production starts to decline. With Shale oil, the decline in production happens quickly which is a double edged sword for mineral owners. It means prices will likely go up sooner than later, but also that your producing wells will decline quicker meaning less money than a traditional well over time.
Don’t time the market
As a mineral owner, if you are thinking about selling oil and gas royalties or mineral rights, do not try and time the market. Most buyers understand that here are ups and downs in this industry. Many have a long term investment outlook and they will wait the 10+ years it might take for prices to return to above $100/barrel. As an owner, sometimes it makes sense to sell royalties or mineral rights right now. That’s ok! It’s a very personal decision and you shouldn’t feel like you are forced to sell or keep your mineral rights ever! While many mineral owners are curious about how the drop in oil is affecting oil and gas royalties value, you should not be concerned. There is still ample demand out there for oil and gas rights when you sell the right way.
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