We’ve been nearly alone in taking in some stellar gains in oil stocks since late October, benefiting from an oil rally that few analysts (besides myself) saw coming and positioned themselves for. And the watchword for today is: Let it ride.
You know that I am a long-term bull on oil prices and oil stocks, and even the impressive extension of WTI prices near to $65 a barrel this week throws only a little cold water on my expectations. We’re in the driver’s seat now. You can take some money off the table, sure – but for the most part, let everyone else chase and play catch-up with our stocks.
I was on Bloomberg TV on Wednesday to engage in a bull/bear debate on oil – as if this rally from the mid-forties only began yesterday. A clip from Jeff Currie of Goldman Sachs was played to start the debate, where he noted the robust oil demand expectations for 2018, but was pessimistic about sustaining $60 oil based upon the deep backwardation of the futures markets.
In person, I debated Michael Cohen of Barclays, whose main pessimism was based upon the 1.5m barrels a day of US production he expects to see added in 2018 – a projection that far exceeds even the very unlikely (according to me) 1m barrels a day from the EIA. But Cohen’s 2018 target for WTI – $52 – is already twelve dollars in the rear-view mirror. Um, that’s not so comforting a forecast – considering its still only the 12th of January.