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Top Oil Picks as Prices Plunge

We suggest investors avoid betting on near-term oil prices and instead take a longer-term view.

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Dave Meats: WTI crude prices plunged 8% yesterday, extending a route that has wiped off almost a third of the benchmark's value in about six weeks. For the first time since October 2017, front month futures closed in line with our $55 a barrel fair value estimate. 

The decline reflects the realization that U.S. sanctions on Iran might not leave a big supply deficit going into 2019 after all, despite initial fears to the contrary. In fact, a handful of OPEC producers and Russia are now talking about the need for further supply cuts to prevent another glut. That's a complete reversal of sentiment in a fairly short period. How things evolve from here is still unclear, as there are several critical unknowns. 

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Dave Meats does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.