The continued and astonishing fall in the price of oil has reached new lows in 2016. Since it’s all time high of $145 in July 2008, it has now trading sub $30 in February 2016 with experts predicting potentially a new low of $10. Even at today’s price, a bottle of water or milk is cheaper. Some producers in the USA who extract low quality oil are actually now paying people to take the oil away for free, as it’s cheaper than storing it, such is the lack of demand. This situation cannot continue for long.

Currently there is a huge supply glut around the world as all the main oil exporting countries are pumping at record levels to maintain market share, whilst the demand is not growing at the same pace due to the economic troubles in emerging economies that were previously very hungry for energy. The supply glut has been magnified due to the new recent entrants to the market thanks to advances in technology such as the shale oil in the USA which was incentivised to begin operations due to the previous record high oil prices. But at these current low prices, the oversupply cannot continue for much longer. As it is simply unsustainable for the new entrants and the high cost producers to continue loss making production, so even with the current demand slipping there is an even larger pending drop in supply coming in the near future which will lift prices in the short term and due to the drop off in large scale investments and new oil discoveries will support and maintain higher prices once more in the future.

For Haven Investors, this could be a once in a lifetime opportunity to purchase shares in the largest and established global oil companies who will most benefit in the future with the collapse of its weakest competition.

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