19
Feb
Wrap – Week Ended 02/17/17
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The ZLT was off 1.3% last week and is down 3.6% year to date. The XOP was down 2.6% last week and is down 5.1% year to date. The energy space subsectors are down from 3.0% (oil service) to 5.0% (oil majors) year to date after posting strong performances in 2016 (well, all but the XOI which was up 18% in 2016 which is better than the broad markets but by far the weakest amongst energy sub sectors).
Questions and comments under The Wrap will be addressed in the Tuesday post.
Enjoy the long weekend.
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Interesting color on non-commercial CFTC data:
https://www.bloomberg.com/gadfly/articles/2017-02-19/it-s-not-record-oil-speculation-that-ll-drive-prices
February 19th, 2017 at 1:41 pmre 1 – too much sarcasm for my taste. Price is an outcome and near term we often see prices fall after speculators are in, doesn't mean they are wrong if there is not a giant move, they have varying time frames for their actions. Also the net long position which includes shorts is up far less. So while many of them are betting perhaps in larger size that prices will go higher in their respective time frames the shorts have also been on the rise since year end. I think he's got a false premise in there, that high net longs signal higher prices in the future when in fact they reflect the recent support for prices in the wake of large early year builds which are a function of seasonal issues related to refiner maintenance.
February 19th, 2017 at 4:47 pmThe Blotter is updated
http://zmansenergybrain.com/subscriber-data/zeb-zlt-blotter/
February 19th, 2017 at 4:48 pmThere is still a good bit of disbelief that OPEC's epic move to reduce supply will reduce very high storage levels of oil……they may ignore the gorilla in the room only for so long…..OPEC has executed on what ever they said they would do in 2014, and i believe same will apply as a result of their decision in 2016…..the few weeks of large supply gains in no way measures up to the determination to bring oil prices higher…..
Should the next few weeks show lower imports and higher demand, the thinking should start to shift…..and equities will follow….
February 20th, 2017 at 9:12 amRe 4 the question remains to what extent and the equities often are late to react. Much like in The Big Short where prices didn't match reality for a very long time. Hopefully for us this time around, sooner rather than later. We're almost to 36 months since the peak so one would have to believe we're closer to the end than the beginning.
February 20th, 2017 at 2:32 pmBaylor…
hope you are enjoying your President's Day
these things take time especially after a very emotionally draining correction in the sector.
the banks suffered for a very long time and while interest rates have been historically low and regulatory bodies put strict regulations in place, it was not until the new administration was announced that banks started to price in deregulation and potential profits that may come in a higher interest rate environment
"proof should be in the pudding"
February 20th, 2017 at 4:13 pmre 5/6 fwiw a lesson learned the hard way: when investing in a sure-to-be-volatile sector it is not a bad idea to follow two rules 1) honestly assess one's tolerance for rollercoaster rides and decide on a relatively modest dollar amount to invest; and 2) reduce that dollar amount by at least 50%, more if one is hypertensive.
February 20th, 2017 at 4:19 pmAnalyst Watch
LPI – Simmons upgrades to Overweight in wake of 4Q review, they previously downgraded the name in November 2014.
February 20th, 2017 at 7:04 pmWTI/Brent spread down to $2 ….wondering it that's because US oil is now being looked at as easily more exportable
February 20th, 2017 at 8:24 pmSome color on how tech is lowering D&C costs:
http://www.oilandgas360.com/were-drilling-ourselves-out-of-a-job/?ct=t(Closing_Bell_Campaign_2016)&goal=0_d4943fe35f-fe730bfe74-27111713
February 20th, 2017 at 8:48 pm5/6/7 – totally agree. I believe we are closer to a new beginning than the alternative
February 20th, 2017 at 9:08 pm