The trading environment is brutal, there’s no denying it. Slowing Chinese growth and impending Fed rate hikes make playing the market a crap game, with wavering momentum and heart-stopping entry points.
In energy, the news only seems to get worse. Production here in the U.S. hasn’t dropped one ounce since October of last year and is down only marginally, perhaps 300,000 barrels a day, since hitting its record highs in April. Permian production is actually growing a bit, despite National rig counts that have been slashed by over 1100. Another stockpile increase reported today of over 4 million barrels sent prices again towards $40 and oil stocks are going down with it – again.
On the geopolitical front, Syria has made headway against the rebels, giving Russia and Iran more credibility at the “peace” talks in Paris and further isolating Saudi Arabia. The Saudis clearly have only one weapon left at their disposal and it’s a full-on oil price war to cripple the economies both of their rival Iranians and Russians. With sanctions about to come off, the Iranians will potentially add half a million barrels a day to global supply next year. Libyan on-again, off-again production will certainly rebound soon and the Russian Petro-state won’t stop producing for a moment either.
And yet, through all of this, I say there is room – even compulsory need – to look for opportunities in the oil space.