Oil Stocks To Watch As Geopolitical Risk Mounts

This week in oil news continue to deliver nothing but ‘green lights’ for investors, and keeps me convinced as I have been for several weeks now that every dip in oil prices – and oil stock prices – is an opportunity to position oneself aggressively for the medium term. One story that added to my bullish attitude has been ongoing skirmishing in Kurdistan. Kurdish Independence has been an ongoing struggle, and the recent ISIS losses have given the Peshmerga renewed room to push back on the centralized Iraqi government and…

Are Oil Stocks Close To A Breakout?

If you’ve got a core energy stock portfolio like me, you’re mostly deployed right now, waiting for the continued re-balancing of the oil market that even the IEA now says will complete in 2018. But, I never tire of trying to find further investments that come up opportunistically. This last week, I thought I perhaps saw one in Apache energy (APA). Now, a few thoughts – first on the state of U.S. E+P’s in general and then on Apache specifically: U.S. exploration and production companies have been following what I termed a…

Are The Bulls Returning To The Oil Market?

In the last several weeks, we’ve enjoyed a turnaround in oil stocks, accelerated by the two major storms in Texas and Florida. And with a bit of a smile, we’ve seen more and more analysts convinced of the renaissance in oil prices that I advised you was coming months ago. In my last column I pointed out Ed Morse of Citibank and Evan Calio of Morgan Stanley changing their bearish tune. This week, we’ve seen a positive note on oil from Goldman Sachs, who only two weeks ago thought that the Harvey and Irma storms were going to kill…

Capitalizing On The Coming Oil Boom

It was in the last several columns here at Oilprice premium that I positively laid down my timeline for recovering oil markets. In Late August I noted to you that the negativity that was pummeling oil stocks was creating several fantastic value opportunities, and counseled to find price targets to either begin accumulating or add to already existing, but very specific energy positions. On September 1st, I sent out an email alert with a simple message: “…..a great opportunity has finally arrived”. Those that heeded this call have…

Was Goldman Sachs Wrong About Oil Demand?

In my last two columns for Oilprice.com premium subscribers, I was first very clear in the opportunity I thought I saw coming in oil stocks. First, I outlined how oil companies had finally retreated from full-speed-ahead capex increases, looking to raise production into an oil environment that hadn’t been able to support it for the last two years. I also pointed out that this retrenchment had come in a unified way from oil companies, continuing their lemmings-like behavior of rather bad decision making during this entire oil bust. The opportunity…

Is The Window Closing On Shale Opportunities?

The energy story this week is still centered in the aftermath of Harvey and Irma – and how those storms will continue to impact the energy markets from both a supply and demand side. The obvious outcome in the Gulf Coast of Harvey has been a lot of crude oil waiting to be turned into product. Much of that crude was intelligently shipped into the Gulf Coast in front of the storm, swelling storage there and in Cushing. There is now a tremendous pressure among the refiners to restart operations as quickly as possible and restore product inventories…

Now Is The Time To Rebuild Your Energy Portfolio

Last week, I wanted to give you a firm go-ahead signal to target and buy oil stocks. This week, we’ve already done fine in following that advice. For now, I have little to add to the recommendation I made last week, except to note that in some cases, the reaction of oil stocks was relayed (I think prematurely) to some of the oil services stocks (shale specialist Helmerich and Payne, notably) – and that bears watching for our next important opportunity down the road. With this very specific directive already out there and your work hopefully…

How Oil Traders Are Playing Hurricane Harvey

In my last column, I opined that oil was on the verge of the supply turnaround that we have been waiting on for the better part of a year, and that buying targets for a true renaissance in oil prices was the order of the day. In the interim, Hurricane Harvey decimated the Gulf Coast, sending all of the energy markets in as much of a state of panic as the residents of Houston have been forced to endure. All of the ‘sure things’ that oil traders have banked upon during storm season were multiplied tenfold, as crude oil got destroyed while…

How To Play The Imminent Rebound In Oil Prices

In my last column, I pointed out the lockstep insanity being followed by US oil companies in increasing production, no matter whether or not the end product was profitable in today’s depressed oil market. Happily, I was also seeing an end to that destructive strategy, with several independent E+P’s guiding lower on production and cutting capex yet again. I won’t replay last week’s column in its entirety. But now that oil is showing real signs of being ready to break out of its 2017 range, what oil companies do now will really…

Has Oil Finally Reached A Tipping Point?

The 2nd quarter reports from oil companies have been an eye-opener, in that they’ve confirmed to me everything I’ve been saying for months – oil companies are following a self-imposed road to ruin. But that is generating a major opportunity for us as investors. In 2014 and throughout 2015, oil companies didn’t plan well for an extended bust in oil, only marginally dropping production and continuing to increase leverage to pay dividends. But they have been forced to rely on their most prime production acreage to keep them…

Shale Lemmings Retreat As Price Recovery Stalls

If we could make up one bankable investment rule for oil stocks for the past three years – it would be to note precisely what oil companies are planning for and then plan on the opposite happening. Oil companies were sure that the oil collapse of 2014 was surely temporary, waiting more than 6 months to make extreme capex cuts and idle 1000 rigs. Their slow acceptance of the oil bust assured that 2015 would be a horrible year for oil stocks. In 2016, they came en masse to their senses, cutting capex on average nearly 70 percent and began selling…

The Key To Profiting In A Volatile Oil Market

Yesterday’s quarterly report from Conoco-Philips (COP) is showing a renewed trend among oil companies, mirroring the report of Anadarko Petroleum (APC) a few days earlier. Both are reporting negative earnings while cutting capex for the remainder of 2017. Capex cuts were epidemic in 2015 and 2016, as oil companies reeled from cratering oil prices. But 2017 was signaled by most oil companies as a green light year, where they chose to again increase capex in hopes that the bust cycle for oil was ending. It hasn’t turned out that way.…

Oil Market Aloof Despite Falling Inventories

The dog days of summer seem to be bringing on even more dog days for OIL. From my perch, there now seems to be very hard caps on where oil can go from here for the time being – both on the upside and, most probably, on the downside as well. On the downside, there is the fact that oil stocks are rebalancing. A continuing rebalancing of the global and U.S. oil supplies is what we’ve been waiting for the last 3 years and should stop any major drops in oil prices. We see that rebalancing in the domestic chart on oil stockpiles, now nearer…

The Break-Even Myth Is Suffocating Oil Stocks

Oil prices, as I have said for the last few columns, seem range-bound. But rarely do they remain range-bound for long. As oil’s pessimism begins to gain steam, oil stocks look less and less like an exciting investment, at least for the next few months of the summer. Last week we were able to predict and use a rally in oil prices that came from a very large financial short covering move from speculative hedge fund and energy traders. That was busted briefly on Wednesday as the markets, back from the July 4th holiday, decided to take advantage…

Have Oil Prices Stagnated?

Two events this week give us some insights on how to trade the oil markets and oil stocks for the next few weeks. First, there’s been a tremendous financial move in the oil futures market. Most energy hedge funds and other speculative non-commercial traders have been looking at the oil markets in 2017 much as I have – and betting that the OPEC production guidelines and an inevitable re-balancing of global oil supply would lead to a constructive price spike for oil. In CFTC commitment of traders’ reports, we’ve generally…

What To Do As Oil Prices Plunge?

Everyone is scrambling for a new plan now — now that oil is in its third mini-bust since the major bust cycle that began in 2014. (Click to enlarge)Since the lows in early 2106, oil has made three retreats; in July/August of 2016, in November of 2016 and right now, in June of 2017. But this retreat is different, in that it comes after the extension of OPEC production cuts that are scheduled to last until mid-2018. Those cuts have not helped oil to maintain prices above $50, they have in fact heralded this latest drop. And that’s bad news…

Oil Prices Fall, But The Macro Picture Looks Bright

Times are rough, if you’re an energy investor, there’s no doubt about it. But it’s important to remember why you’re a subscriber here at the Oilprice premium service and why you’re reading my columns every week. Hopefully, it’s to give you a much better long-term perspective on the oil markets and keep you ahead of the rest of the noise that floats around the energy markets. Look, if you’re looking for a trading insight of whether oil will be above $50 this week or below it, I will tell you that my column…

Bearish Markets: A Self-Fulfilling Prophecy

In my early days of trading, I had a ‘mentor’ of sorts who gave me all sorts of advice and useful tips about market action. One I remember clearly was him saying this: “In a bullish market, all news is bullish. In a bearish one, everything will drive the market lower”. Boy, this week proved again how incredibly right he was about that. We’ve just had a week of the most pessimistic reaction to what should have been very bullish news for oil. Instead, we’ve seen those bullish fundamentals rewritten as bearish indicators…

The Oil Market Is Destined To Re-Balance

It’s been one week after the ‘magic’ oil supply deal was extended between OPEC members and Russia and it’s been followed by just about the most pessimistic response I’ve ever seen to bullish news. Now as a trader, no one is more familiar with the axiom to ‘buy the rumor and sell the news’, so this drop in oil prices and even more vicious drop in oil stocks should not have come as much of a surprise to me. But quite frankly, it did, as has the pessimism that has surrounded the oil markets since the announcement…

It’s Not Over For OPEC Just Yet

OPEC extended production cuts that were originally agreed in December 2016 for another 9 months, delivering both OPEC members and Russian discipline that will last well into the Spring of 2018. And still the Saudis and OPEC continue to get no respect at all, like Rodney Dangerfield. The oil markets, in fact, after a two-week boom in prices, used the actual date of the meeting to retreat from their highs, ending the day below $50 a barrel. This could be a reaction to the very late speculative players trying to take advantage of a decision that was…

This Could Be Oil’s Last Trip Into The $40’s

No need to bury the lede in this week’s column: OPEC will extend production guidelines in next week’s meeting in Vienna, and extend them even more than originally planned. The oil market wondered whether the OPEC production cuts would even hold when they were first installed, now the market is about to get the added benefit of an 8-month extension instead of the planned on six months. But what has been the response from the oil markets? They’ve been tepid at best. .This reaction has been attributable to one physical and one financial…

North American Oil Stocks: Buy Or Sell?

Oil spent the last week in a fast funk before a resurgence of interest sent prices rising back towards $50 this week. As the 1st quarter reports of many of the U.S. E+P players come in, we have a great opportunity to assess which one of them, if any, we’d like to focus on to take advantage of an oil price that seems momentarily stuck between $45 and $53 dollars a barrel. In general, the story of earnings from each of them is exactly the same, although the differences, when there are some, are critical for knowing where to invest in the energy…

U.S. Oil Producers Becoming Increasingly Self-Destructive

It’s absolutely maddening watching the first quarter results float in from the large cap energy companies. And the one image I continue see in my mind that I can’t shake is of lemmings going over a cliff.This image alone truly sums up the complete idiocy of virtually all of the U.S. oil producers right now; they are showing no creativity or independence, doing what everyone else is doing, despite the fact that this behavior is leading them all to a very, very sad moment, if not their own ultimate demise. What has become increasingly…

Is Now The Time To Make Long Bets In The Oil Market?

Negativity has almost never been as high as I’ve seen it in the past several days for the oil space. And, to be fair, I can understand it easily – oil stocks have been real dogs. As the stock market has soared through 21,000, oil stocks have done more than just lag the major indexes, they’ve outright sagged against oil prices that continue to languish near $50 a barrel. It’s been a tough time to be a bull on oil stocks, but it also has been a time that would cause many to reconsider their strategy. After all, there’s…

Why Brexit, Bombs And Trump Can’t Move Oil Prices

2017 hasn’t seen much volatility in oil prices, something we might not have expected with a new administration, a change in Fed policy, Brexit and a hundred other smaller events this year. So, what’s left to move oil prices, if the most common inputs aren’t having much impact? Normally large global trends of production, OPEC plans, rumors of war and actual hostilities will have a significant impact on prices. In recent days, however, we’ve seen a large tomahawk missile strike on Syria and a use of the “Mother of all…

Why Oil Markets Are Not Recovering Much Faster

For several months, I’ve been trying to reconcile two divergent and counter-intuitive trends in oil, and it’s forced me towards a soberer outlook going forward. It’s not that I don’t think oil prices aren’t ultimately headed back to triple digits – I absolutely do. But the timeline for that move continues to lengthen, as oil companies find ways to survive and revive in this horrible market. Two quick charts will tell you what I mean: (Click to enlarge)Here’s the Haynes and Boone bankruptcy monitor charting…

Oil’s Catch-22 That Nobody Saw Coming

For several months, I’ve been trying to reconcile two divergent and counter-intuitive trends in oil, and it’s forced me towards a soberer outlook going forward. It’s not that I don’t think oil prices aren’t ultimately headed back to triple digits – I absolutely do. But the timeline for that move continues to lengthen, as oil companies find ways to survive and revive in this horrible market. Two quick charts will tell you what I mean: (Click to enlarge)Here’s the Haynes and Boone bankruptcy monitor charting…

U.S. Shale’s Breakeven Myth

Most oil analysts have one goal in mind, and it’s not to be right about predicting the future prices of oil. It’s about trying especially hard not to be wrong. The difference is important. Most analysts, including the IEA and EIA, cannot make any forecast that can be recalled months later to make them look foolish. The safest prediction you can make is always to see not much change at all, whether you see oil at $25 a barrel or $125 a barrel. If something dramatic changes, the worst you can be accused of is not seeing what virtually…

A Rising Star In U.S. Shale?

They say that success is easy: All one needs to do is find something that works, and then do it – over and over again. Early last year, I recommended Silver Run Acquisitions, a special purpose acquisition company (SPAC) put together by EOG Resources ex-CEO Mark Papa, one of the ‘movie stars’ of shale oil production here in the United States. I liked Mark Papa’s approach to building EOG, and the unbelievable success that his company has had in finding, accessing and managing some of the best acreage in the Eagle Ford and…

Are The Survivors Of The Offshore Bust A Buy?

I know that many of the oil analysts out there have gone weak on me. Unable to believe in the inevitable re-balancing of the oil market, they continue to see long, flat markets in oil prices coming for the next year, perhaps two. Even OPEC and the IEA, in need to put out conservative projections, are only looking for $60 oil at best by the end of 2017. You know, I think they’re all wrong. There’s nothing that has proven to be more wrong than counting on an absolute ceiling – or floor – in oil prices in the last decade. Meanwhile,…

Stop Counting On Oil Contangos

In early 2009, I did a segment on CNBC with Erin Burnett and the late Mark Haines, pointing out a way for us to band together and make some serious money. I proposed we find the funds (or the financing) to buy currently priced oil on the physical markets, trading somewhere in the mid 30’s, and then selling the futures about six months out, which were trading for nearly $15 dollars a barrel more. A simple idea – we would store the oil, pay the fees, and deliver at the futures price later, banking about, I estimated, 11 dollars a barrel…

Energy Stocks And The Political Prism

As investors, we’ve settled on focusing on well-run independent U.S. shale producers for the core of our holdings, especially those in the Permian basin. Although the oil markets seem to be stuck right now between $51-$55, these names have continued to hold their own and advance slightly – and will be the best positioned when oil breaks out of this range. Now, I don’t want another column devoted exclusively to oil’s range and the circumstances, both on the bullish and bearish side for oil either stopping here or moving higher,…

As Oil Markets Remain Unpredictable, Permian Is A Solid Bet

Sometimes trading is easy, sometimes it’s not. But certain rules apply at all times: The trend is your friend. Get out of bad trades. When there’s nothing to do, do nothing. And today’s lesson: Go with what’s working. In the oil market, we’ve had a period of relative quiet, at least as the oil price is concerned. We’ve been bouncing back and forth between $51 and $55 a barrel since the beginning of the year. Analysts have done little in the last two months besides guess where oil is headed next; one week they’re…

Turbulent Times Ahead For Refiners

The crude markets stayed relatively flat for the last week, as the real battle continued to be waged between the major movers of oil prices. The fundamentals of supply and demand continue to work in favor of a crude spike higher while the financial battles of those who think oil is going up and those betting, or at least guarding against, oil prices dropping again precipitously is biasing prices to the downside. Between the two, there is a disconnect between U.S. oil production – definitely on the upswing among shale players and global production,…

Take A Trading Pause As Oil Stocks Become Overweight

One of the toughest things to do as a trader is nothing. After all, our livelihoods are derived from making trades, not avoiding them. And, having come from a commodity background, doing absolutely nothing was rarely necessary – if you don’t like a market, you can sell it and go short just as easily as long. Such conveniences do not exist as easily when you’re investing in stocks. And such is the case I see now in the energy markets, where oil prices are ahead of their likely ‘correct’ prices in the cycle while oil…

Trump’s Infrastructure Push Is Set To Benefit These Companies

Trump’s move this week to restart the building of Keystone XL and the Dakota Access pipelines are an indication of the increasing help infrastructure is likely to get from the new Trump administration, impacting the prices that consumers will pay for oil and gas. It should also impact a good number of pipeline companies that have been waiting for approval of new lines, mostly to move natural gas. For a long-term, conservative play in these very overheated markets, they could be a good cornerstone for investment. Trump’s executive order…

Follow The Big Money In The Shale Patch

This last week, we’d have to say that many of the mini-majors, as well as one mega-major, just ran out of patience with this oil market. Just as the Saudis threw in the towel on glutting a market and waiting for US independents to crack, opting for a production agreement, so did some key oil companies here in the US give up on waiting for a greater value, convinced that the oil markets are headed steadily higher from here. And one theme recurs through it all: Permian basin shale oil. First, Exxon-Mobil’s (XOM) major move of buying up…

These Downstream Companies Are Poised For Gains This Year

Watching the Rex Tillerson confirmation hearings, I’m wondering how his move as the head of the State department, should he be confirmed, would impact oil and gas stocks. There’s a lot there to be considered. The most obvious initial impact could be with Exxon-Mobil (XOM) itself. It’s not just in the psychological buying that would likely come into the market with the Ex-CEO becoming Secretary of State, it is the possibility of the reduction or outright complete rollback of Russian sanctions. Those sanctions have been the lone…

The Natural Gas Play To Start The Year

For most of 2016, we searched for value in oil stocks, while ignoring natural gas. But while I believe oil stocks will have a great 2017, I also see terrific value coming in natural gas stocks at various times during the coming year. One of those moments, I believe, is now. We had an interesting end for natural gas in 2016, as prices spiked overseas, sent higher with the intensity of the cold weather in Europe. While the Arctic has experienced one of the warmer starts to winter on record, that has been balanced by the historic cold that began in…

Coal And Natural Gas Poised For Gains In 2017

We’ve done exceedingly well in 2016 trading oil stocks – but as we move to 2017, we need to take a look at where to concentrate our focus to continue the strong performance. While we’ve had several opportunities to take advantage of dips in oil prices to get quality oil E+P’s at bargain prices in the last year, those bargains are no longer around – many of our most favored stocks are well priced and not to be bought today. So to start 2017, as with all my trades, I want to look for VALUE – where the rest of the…

This Is The Time To Pick Up Oil Stocks

If you needed a better invitation to get long oil stocks for the next two years, the naming of Exxon Mobil (XOM) CEO Rex Tillerson as Secretary of State couldn’t be more obvious. There are some clear themes floating through the nascent Trump administration, set to take office in January and one thing is becoming stunningly clear: Oil and gas are going to be the driving theme of this new Government. The pieces to this puzzle are coming together very quickly and it starts with a steady connection of Russia to the incoming President and his…

Global Energy Advisory December 16th 2016

Politics, Geopolitics & Conflict • U.S. President-elect Donald Trump has nominated Exxon CEO Rex Tillerson for Secretary of State, sparking outrage on all sides of the political spectrum. What unites the opponents of Tillerson’s nomination is the belief that he has uncomfortably close ties with Russian President Vladimir Putin and will work to end sanctions against Russia because of his loyalty to his current employer, Exxon. Others, however, argue that if Tillerson becomes Secretary of State, Trump will use him to convince Russia…

A Real Opportunity For An Oil Price Recovery

The OPEC production agreement, which we called correctly, has already helped hoist the profitable oil stocks we held, but what about 2017? One way I’ve looked at oil and oil stocks is by looking at the crude curve – the differentials between monthly contract prices. And a recent big move in the curve makes 2017 look very positive indeed. I’ve seen all kinds of futures curves in my 30+ years of trading oil, and many analysts believe that the crude curve is really predictive of the future –but more often than not, it is merely…

How To Trade The OPEC Deal

OPEC delivered a very substantial production cut on Wednesday in Vienna, and first, I need to take a victory lap: – I was one of the very few (I believe Francisco Blanch of BofA was the only other), who predicted that OPEC would be successful. In my last oilprice premium column, I also gave two stocks to buy to play the meeting, Noble Energy (NBL) and Oasis Resources (OAS), which were up 11% and 28% on Wednesday. I’d call those two pretty good trades. No time to stand on your laurels – everyone wants to know where I think oil prices…

How To Play The OPEC Production Cut

We’ve been trying to leverage what we’re convinced will be a substantial OPEC accord on Wednesday, November 30th, and spent the last several columns outlining why we’ll see at least a six-month agreement to knock more than a million barrels a day of OPEC production off the market. Now comes the time to find some stocks to play for the next week and going into the rest of the year. Here, I’ve tried to point people towards some of the Permian shale players, who are already the hottest of the oil companies: Cimarex Energy (XEC),…

Why You Should Expect A Substantial OPEC Deal

OPEC ministers are again meeting, this time in Doha, but haven’t yet showed a sign of a sweeping deal that could come out of Vienna and OPEC later this month. But I believe it’s going to be a lot more substantial that just about any other analyst thinks. The markets are saying there won’t be much if any cut from OPEC and non-OPEC states from the meeting that’s going to take place on November 30th. A deal to limit OPEC to 32.5m barrels a day that was first suggested in Algiers in October would send oil prices well over $50…

It’s Too Early To Draw Conclusions From Trump’s Energy Policy

It’d be easier if I were an expert in something other than energy – that’d make the forecasting of which stocks will benefit under a new Trump administration so much easier. With Obamacare’s repeal about the most likely of President-elect Trump’s sketchy proposals to come to pass, we’ll continue to see a whopping rally in the healthcare sector and insurance. With the energy space, predicting what will be affected is proving to be much more difficult to parse. Intuitively, you’d think Mr. Trump’s energy policy would be fantastically bullish.…

Hold Off On Energy Stocks Until After The Elections

We’re seeing oil stock prices come down along with oil prices themselves, to targets that we had established long ago as worthwhile spots at which to get back in. But something is making this drop in prices a bit more suspicious than some others. The answer is obvious: The upcoming U.S. Presidential election is still causing a wildcard in our investing plans. And for right now, I’m wary of its outcome and the implications for our oil stocks. Everything seems to be on target: We had a great ride in oil stocks from earlier this year until…

Why Are Refiners Still Underperforming?

During this oil bust, one sub-sector of energy should have been raking it in – the refiners – and yet their stocks have remained relatively flat for 2016. Low oil prices, combined with an increase in gasoline demand as we have seen here this summer in the U.S. should have translated into big moves for Valero (VLO), Tesoro (TSO) and CVR Energy (CVR), but instead we’ve seen the refiners lag throughout most of the year. We can isolate two reasons for this; A domestic glut that was slow in clearing and the cost of Ethanol credits. One of…