There’s little more than frustration out there right now from those of us in the energy world – whether we’re trying to trade our way around stocks or if we’re inside the industry, trying to negotiate a very low price for gas and oil that seems destined to hang around for still quite a long time to come.
There is a natural interest in finding a bottom price for oil and in thinking that once it is reached, the direction changes and oil begins to go upwards. But I want instead to talk about energy investing opportunities in terms of time and not targets. The final numbers for oil and oil stocks shouldn’t matter much, if we are looking long-term. We could see $20 oil – or we could see a fast short-covering rally at any time of 20 percent or more. But what matters far more than this for productive investment in energy is in finding the correct timeline when oil production and demand will again begin to rebalance – these are the signs that are much more crucial to correctly timing our investments.
I have been clear since early 2015 that I don’t believe those fundamentals become constructive again until the 3rd quarter of 2016 at least. And several events and news items in the last week lend more support for that timeline – and point towards a very slow and delicate accumulation of quality oil stocks for the long haul.
1 – Both BP CEO Bob Dudley and Jeff Currie at Goldman Sachs pointed out this week the…