It's been said that "we can't have nice things."
A day after markets cheered the U.S.-China trade truce, U.S. President Donald Trump threatened to slap $4 billion in tariffs on goods flowing out of the European Union.
That news overshadowed OPEC's major decision to extend crude production caps through March 2020.
Oil prices plunged Tuesday.
And despite all the chatter about oil prices heading higher in the third quarter, economic growth concerns and trade jitters are driving global oil prices lower.
Today, we're going to discuss how to make money on this trend…
Why Oil Prices Moved Lower
OPEC and its allies met in Vienna, Austria, from July 1-2 with one goal in mind: supporting oil prices and helping to push them higher.
Saudi Arabia, Russia, and a host of other energy-producing nations rely on oil revenue to support their balance sheets. The countries agreed to maintain existing production cuts through March 2020.
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This came at a time when most analysts expected that U.S. stockpile levels would decline – adding another small boost to prices.
Instead, we watched early Tuesday trading press oil prices deep into the red. Brent crude was off 2.8% at lunchtime, while WTI crude futures were off 3.5%.
Global economic concerns are affecting the demand outlook for the road ahead. Around the globe, bond prices are plunging in a race to safety among investors.
The German 10-year bond just hit an all-time low (at -0.368%). And as we've noted, there is about $14 trillion in global debt that is locked to negative interest rates.
The U.S. 10-year rate is now under 1.99% – and it will likely keep falling now that recessionary concerns are popping up across Europe. Trump's threat to hit Europe with tariffs on $4 billion in goods – thanks to a dispute over aircraft subsidies – is worsening the global economic outlook.
Of course, a 1.99% return on your money isn't very attractive. Rather than tapping into bonds, let's discuss a must-own energy stock that pays a 4.45% dividend and has massive upside heading into 2020.
Buy This Stock Right Now Before Wall Street Catches On
The top stock to buy right now is one that has faced a pullback in the last 24 hours.
Valero Corp. (NYSE: VLO) is one of America's leading refineries. Despite falling oil prices and concerns about gasoline demand, there is a major event on the horizon that will drive this stock to the moon.
Investors should buy on the recent pullback.
We've mentioned this before, but the International Maritime Organization will introduce new global regulations that will dramatically impact international shipping operations in 2020.
Known as IMO 2020, this new regulation mandates that tankers need to reduce the sulfur specification of "bunker fuels" from 3.5% down to 0.5%.
This doesn't seem like a big change on the surface, but in refinery standards, it's a massive development.
Global demand for low sulfur fuels will increase overnight on Jan. 1, 2020, by 2 million barrels per day.
This means that the refineries that can process high-sulfur crude into lower-sulfur products have a massive advantage in the near future.
Valero is the largest independent refiner on the U.S. Gulf Coast, and it has plenty of access to shipping customers around the globe.
Valero is currently trading under $81 per share. That's quite a bargain from the all-time high of $125 that it struck last year.
Wall Street currently has a price target of roughly $98, which is about a 20% gain from current levels. But we argue that Valero stock will trade somewhere closer to $105 over the next 12 months as the stock benefits from improved trading spreads and increasing demand for low-sulfur crude products.
Trump's Secret Weapon Against Chinese Aggression
Hostilities in the South China Sea now seem imminent, and the Trump administration could be on the verge of its first major crisis. But thanks to a small $6 U.S. defense firm with a top-secret new technology, China is about to be taken to the woodshed. Frankly, you have to see it to believe it…
This article is supplied courtesy of Money Morning.