An overview of the energy space this week reveals that energy has been a lousy space this week. It seems opportunity abounds almost everywhere except in the oil patch particularly as earnings begin to come in fairly well and the January swoon that most analysts predicted just hasn’t materialized.
I watch my favorite companies trade and keep coming back to the same cautious approach – even though many of the fundamentals continue to be good.
Crude prices are steady and strong, despite a scary drop to support in WTI at $91. That’s an indication from the commodity that the quarterly reports from domestic E+P’s are going to be stronger on production growth while weaker on margins, and that could be the start of a very worrying trend for US producers. I am concerned that while the EIA sees shale production growth through 2020, we will get effective crests a lot sooner than that. Can we do to the ‘boom’ of shale oil what we did to the ‘boom’ of natural gas from shale? Almost undoubtedly we will.
But forgetting about the fundamentals, particularly the long-term fundamentals for a moment, we get an even view into the space by just looking at the market action and individual cases of some of the many stocks I follow. Reading through this group of stories will have you as depressed about the sector as I.
Apache (APA): After partially shedding Egyptian liabilities…