Slumping Oil Prices Lead to New Opportunities

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The conventional thinking is that reducing oil production will bring oil prices up. That is what I have read for months and months from the most renowned analysts from some of the most prestigious firms. This is the action necessary to help oil futures get back to the great levels of yesteryear, where Brent Crude futures were at least trading in the high US $60 range sometimes peaking over $110.

What can we expect as far as trading levels for oil in the near future and beyond? One thing is for sure, levels above $100 seem like they will be fairy tales and legends, to be recited by those who were a part of that era. Oil isn't ready for the grave, but it will be trading within different parameters for the near future, as the great oil producing nations figure out how much of a supply they will make available to the marketplace.

Brent Crude Oil Prices - 10 Year Daily Chart

This significant loss in oil values naturally moves investors to look at what is happening in other sectors of energy production, as well as very new developments in a very old concept, energy storage. Tesla Inc., a major American automaker, energy storage company, and solar panel manufacturer based in Palo Alto, California has been recording record growth while oil is recording the most lackluster values in more than 10 years. Is this just coincidence or are we at the dawning of a new trend in energy production, energy usage, and energy storage?

Just as we had to say goodbye to wood burning stoves and coal heated housing, there is a possibility that automobile fuels and home energy needs may be replaced or combined with new energy sources with more power, readily available and affordable enough for the masses to consume.

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If a new trend is in fact being revealed we should see similar movements in stock values in related industries. Not just those near to Tesla but around the world. My research lead me to 5 companies involved in energy storage, Johnson Controls International plc (JCI) headquartered in Ireland with operations in the US (currently involved in a merger with Tyco International), Bosch Ltd., ABB India Ltd headquartered in India, and  BYD Company Limited located in China, these four producers of energy storage units along with Tesla should show similar movement in their values globally if in fact a new energy trend is developing.

Johnson Controls International plc (JCI) Currency in USD

Bosch Ltd(NSE:BOSCHLTD) Currency in INR

ABB India Ltd(NSE:ABB) Currency in INR
 

BYD Company Limited Currency in CNY

Tesla Inc(NASDAQ:TSLA) Currency in USD

The charts above show all of these firms presenting gains in the recent weeks along with Tesla. Comparing these gains to the performance of oil futures is definitely food for thought, especially when you weigh in on how these two industries can possibly react to the new innovations to be brought by Tesla and the energy storage firms.

I was quite surprised to find that the leading ETFs, SPY whose mission is to mirror the performance of the S&P 500, and IVV an S&P 500 Index fund both still have holdings in JCI even though JCI is no longer a part of the index. It seems I'm not the only one speculating in energy storage. JCI's upcoming merger with the Tyco International conglomerate also shows signs of a more global approach to JCI delivering its products to the world.

New energy fuels and new energy technologies are coming to the mainstream consumer. The rise in the value of companies involved in energy storage is evident, and not isolated to one region of the world. Oil values will find new parameters, the acceptance of oil's new levels is what today's energy investor is now faced with. There is still a demand for oil and its byproducts, but it's time to make way for the new guys in energy supply. Advanced Energy Storage technology is coming, and investment opportunities will be there for those looking to the future.