Governments shouldn't count on low oil prices: IEA

Countries should not bank on oil prices remaining low when formulating their energy policies, as supplies could tighten from mid-2016 due to a drop in investment and falling U.S. output, a senior industry official said on Monday. 

Global oil prices have more than halved since June 2014 on rising U.S. shale oil output and as members of the Organization of the Petroleum Exporting Countries (OPEC) decided to defend market share rather than cut production.

 "If it comes true, this will be the first time in two decades we will see oil investments declining for two consecutive years," he said. "One should think about medium and long term implications of this lack of investments."

DYI Comments:  With declining capital expenditures declining for two years the only way for oil prices to decline further is for a world wide recession(a very real possibility).  If that occurs then oil prices could very well visit the twenty dollar range but would not stay at that low level as the world recovers from recession.  Plus due to the lack of investment this will tighten up supplies until new investments come on stream.

This is an excellent time to dollar cost average into your favorite oil and gas mutual fund.  Here at DYI ours is the Vanguard Energy Fund symbol VGENX. If the world and the U.S. experiences a deflationary bust with oil prices in the $20 dollar range then lump summing would be recommended as the potential for downside risk would be limited.  Look into Adams Natural Resource Fund symbol PEO.   An excellent closed end fund specializing in the energy field.

DYI