I hear a lot of chatter on cable television about the future direction of oil prices, with predictions all over the map. These “30-second pundits” often prove wrong in their assessments, but they’re never held accountable. They just move on with impunity to the next bad prediction.

Amid the energy sector’s uncertainty, at least one thing is certain: Oil price volatility is here to stay into the foreseeable future.

If you’re not an energy investor, you should still care about the fate of the energy sector, because it’s intertwined with the fate of the broader financial markets. Wall Street views energy demand as an economic barometer.

The major stock market benchmarks have been rallying since their lows of late March, but the recession persists. Energy markets are vulnerable and if they stumble again, the broader market will likely get pulled down. This underlying weakness has been masked by the shiny veneer of Big Tech’s resurgence.

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Fossil fuels still dominate the energy sector. The global economy’s dependency on oil and gas is entrenched and won’t end overnight. However, we’ve reached an inflection point whereby renewables are enjoying an upward trajectory at the expense of fossil fuels. The pandemic is accelerating this trend.

Notably, the cost of generating electricity from utility-scale solar photovoltaic and onshore wind continues to decline, to the point where it’s more cost effective to build and operate new alternative energy projects than to maintain existing conventional power generation facilities.

We’re witnessing a related seismic shift: the waning fortunes and influence of the OPEC+ oil cartel. Case in point: Energy giant Saudi Aramco announced on Sunday that its second-quarter profits plummeted a staggering 73%, due to energy demand destruction wreaked by the coronavirus.

The Saudi oil behemoth reported a net profit of $6.6 billion for the three months to June 30 compared to $24.7 billion for the same period a year ago. Aramco’s net profit for the first half of the year plunged by 50.5% to $23.2 billion, versus $46.9 billion in the same year-ago period.

It’s not just the Saudis, of course. “Supermajors” BP (NYSE: BP), Chevron (NYSE: CVX), ExxonMobil (NYSE: XOM), Royal Dutch Shell (NYSE: RDS.A, RDS.B), and Total (NYSE: TOT), all reported combined Q2 losses of $53 billion.

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Saudi Arabia is the world’s biggest crude oil exporter and as such, a bellwether of the global oil market. The kingdom is the de facto leader of the OPEC+ cartel, which is experiencing tough times.

OPEC+ refers to the 13 official members of the Organization of the Petroleum Exporting Countries and 10 other non-OPEC partners including Russia. The five founding members of OPEC were Venezuela, Iraq, Saudi Arabia, Iran and Kuwait. Once an unassailable juggernaut, OPEC+ this year has been roiled by internal spats and oil price wars that at one point in April drove the per-barrel price of West Texas Intermediate crude to nearly $40 below zero.

Cartel members have since put aside their differences (for now) and joined forces to implement production cuts. Remarkably, those cuts have stuck, without the usual cheating. As the following chart shows, crude has risen since cratering in the spring:

To be sure, oil prices have generally recovered from their April lows but they’re still whipsawing investors. And potential triggers abound for another collapse in oil prices.

Crisis in the shale patch…

A tsunami of bankruptcies looms in the U.S. shale patch. In the first half of the year, 23 oil and gas producers filed for bankruptcy. These companies shoulder a combined debt of more than $30 billion.

Amid the resurgence of new COVID-19 cases, the struggles of shale producers are likely to worsen. The energy sector crisis is paving the way for a post-COVID world in which renewables such as solar and wind are the growth area for investors, not fossil fuels.

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Oilfield services, which is highly cyclical, has been especially hurt. These companies are almost completely dependent on the upstream segment. When exploration and production expenditures decline, the companies that provide these service get clobbered the worst.

Reliable safe havens…

Under these investment conditions, caution should be your stance. If you’re looking for ways to beat the market with less risk, consider an asset class that’s a time-proven hedge against uncertainty: dividend-paying stocks.

These all-weather equities can help insulate you from another market shock. For our special report on the best high-yielders, follow this link.

Gold is another reliable hedge during tumultuous times. Gold has enjoyed a big run-up in prices over the past year, but the rally in the yellow metal should continue. Our experts have found a gold play that’s positioned to generate exponential gains. Read our special gold report.

John Persinos is the editorial director of Investing Daily. You can reach him at: mailbag@investingdaily.com