• 3 minutes Shale Oil Fiasco
  • 7 minutes "Leaked" request by some Democrats that they were asking Nancy to coordinate censure instead of impeachment.
  • 12 minutes Trump's China Strategy: Death By a Thousand Paper Cuts
  • 16 minutes Global Debt Worries. How Will This End?
  • 2 hours americavchina.com (otherwise known as OilPrice).
  • 1 day Everything you think you know about economics is WRONG!
  • 1 day Wallstreet's "acid test" for Democrat Presidential candidate to receive their financial support . . . Support "Carried Interest"
  • 2 days Democrats through impeachment process helped Trump go out of China deal conundrum. Now Trump can safely postpone deal till after November 2020 elections
  • 2 hours Forget The Hype, Aramco Shares May be Valued At Zero Next Year
  • 9 hours Natural Gas
  • 5 hours Joe Biden, his son Hunter Biden, Ukraine Oil & Gas exploration company Burisma, and 2020 U.S. election shenanigans
  • 2 days Judiciary impeachment: Congressman says Sean Misko, Abigail Grace and unnamed 3rd (Ciaramella) need to testify.
  • 15 hours Winter Storms Hitting Continental US
  • 1 day 2nd Annual Great Oil Price Prediction Challenge of 2019
  • 2 days Quotes from the Widowmaker
  • 2 days Tesla Launches Faster Third Generation Supercharger
  • 4 hours My interview on PDVSA Petrocaribe and corruption
Dan Dicker

Dan Dicker

Dan Dicker is a 25 year veteran of the New York Mercantile Exchange where he traded crude oil, natural gas, unleaded gasoline and heating oil…

More Info

What Explains The Divergence Between Oil Prices And Oil Stocks?

Oil Rig

These last few weeks have been confusing, even for a 35-year oil trading veteran like me.

There are some things I’m recently seeing in energy stocks vis-a-vis the energy markets that I’ve rarely seen before.

I’ve done exceedingly well during my career by investing in energy stocks using my understanding of the underlying energy markets.

If I went back and charted both of them using data from 2010-2014, or 2003-2007, or 2013-2016, you’d be hard pressed to tell the difference between the two lines on the chart.

But have a look at this:

(Click to enlarge)

There’s been a huge divergence between oil prices and oil stocks, starting most apparently in the early winter of 2017 and currently flat-lining the stocks right now compared to oil.

So, what the heck is going on? I suggested a couple of possible reasons in my last column, including rising interest rates, EIA forecasts for future production and a few rogue shale players screwing it up for everyone with continuing breakneck drilling. My old friend Jim Cramer suggested on his show that younger hedge-funders are uninterested in ‘old-fashioned’ fossil fuels and won’t buy. If that’s true, they’re going to be left out of a global demand picture that, in even the most aggressive estimates, won’t begin to flatten until 2040.

Frankly, I’ve discarded all of these as insufficient to derail a correlation that’s…




Oilprice - The No. 1 Source for Oil & Energy News