What’s Going to Drive the Continued Recovery of Oil Prices?

Last week, Saudi Arabia appointed Khalid al-Falih as its new energy minister to replace the long-serving Ali al-Naimi. Saudi Arabia is the biggest oil exporter in the world and al-Falih has pledged that he will maintain the kingdom’s oil policies.

There are signs that Saudi Arabia may be succeeding in its efforts to squeeze out shale oil producers in the United States.

In March and April alone, 18 oil companies in North America had filed for bankruptcy, driven in part by banks there cutting credit lines to the oil & gas industry. Then, the US Energy Information Administration said that crude oil stockpiles in the US had fallen by 3.4 million barrels in the week ended 6 May 2016.

All these point to the likelihood of oil prices continuing to recover over the medium term at least. There are many stocks in Singapore’s market that have heavy exposure to the oil and gas industry, with Keppel Corporation Limited (SGX: BN4) and Sembcorp Marine Ltd (SGX: S51) happening to be two of them. Investors in such companies may want to pay some attention to developments in the world of oil.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Ong Kai Kiat doesn't own shares in any companies mentioned.