There’s little in the energy space that I like right now; major indexes look fairly priced and energy stocks offer even less to get excited about. US E+P has had it’s major run in 2013 and the two values I like – Anadarko (APC) and Noble (NBL) – have been quiet and need more patience. Refiners are well priced considering the curve, except perhaps for Valero (VLO), which seems overextended. Offshore drillers are off-cycle and I’m not ready to pick a bottom, yet. Natural gas at $4.40 looks steady.
But the continuing story surrounding Ukraine, which I thought would begin to quiet by now has instead unbelievably escalated. Oil prices are at risk for a major spike upwards.
Ukraine’s coup d’état was met, in my view, by a very restrained Russian reaction – securing their Black Sea port at Sevastopol and reclaiming a 90+% native population in Crimea. My thoughts were at the time that Russia would then proceed to dislodge the minority, Western-leaning ‘government’ in Kiev by slowly using their strong influence in natural gas supply through the nation – a tactic they have used successfully in Eastern Europe twice in the recent past.
Beyond what was, I suppose, a necessary token reaction of sanctions of half a dozen Kremlinites by President Obama, I expected the rest to be solved internally – and all the fears of further Russian military incursions would fade…