And all of that means more work for the oil services companies.
Here's another reason the oil services should continue to do well: With lower oil prices, it might not have made economic sense to go after smaller or harder to reach oil deposits. Those fields require "intensive care," as our research analyst Andrew Gordon calls it. But with $100/barrel oil, the majors are going to be putting marginal fields into production and keeping them operating longer. And oil majors will be relying on the oil services companies to help coax more of that oil out of the ground.
The scramble for oil has just begun. Many experts project oil demand to increase 70%-120% by 2050. And as the easy to reach oil runs out, the oil majors will need the expertise of the oil services companies more and more to help them find (and put into production) new fields.
If you are looking for another way to profit on the rise in oil prices (or looking to diversify your oil bets), you should take a long look at the oil services.
We like the companies that have dominated the industry for decades. They have the size to handle the increased demand, the expertise to meet the challenge, and the contacts to get the lion's share of the new business. The oil majors can't afford to look anywhere else. There is simply too much money on the line.
To gain exposure to these companies, consider the oil services ETFs. A few examples: the OIH, IEZ, and PXJ.