WHY INVEST IN OIL? - Magma Oil

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WHY INVEST IN OIL?

Investing
During the late 1990's the oil world seemed to be destined for oblivion. In early 1999, the Economist predicted 5 dollar oil, declared the industry dead, and oil traders were commonly expected to end up like dinosaurs: extinct.

Since that date, you would be hard pressed to think of an asset that has triggered as much excitment, provoked as much rumour mongering or garnered as much media interest as the price of oil.

It is so volatile, you would be forgiven for asking: "Why should i bother investing?" Here is why we think you should:
1- Oil is Vital:

Oil is a force multiplier for the Economy. Without it, modern society cannot survive

Oil and its derivatives will likely be involved at every step of any industrial or social process. Fort that reason alone, it should be in your portfolio.
Transport
Graph of inelsatic demand
2- Demand for oil is highly inelastic:

Because it is so vital, prices take a long time to affect demand, if they affect it at all.

As you can see from the graph on the left, Oil demand is less correlated to price.
3- Oil must always flow:

Oil is to the economy what blood is to the human body.

Rain or shine, Boom or recession, 24 hours a day, seven days a week, Oil must be pumped from the ground, refined and delivered to customers. Their livelihoods, if not their very lives, depend on that flow.
Tanker in Storm
By investing in the activity that surrounds oil, you should obtain returns that are uncorrelated to price or the economy. If you want to hear more, please use the form on the contact page.
 
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