It’s all pretty much going to schedule. There have been overextended prices in oil and some oil stocks, with most of the speculative oil money pouring in to the market on the long side. And in response, like clockwork, oil stocks have looked to take a break from their move higher, just as the 4th quarter reports from the majors begin to come in.
There’s a lot of moving parts but all of it is setting up to be a great opportunity to re-position ourselves in both E+P’s, as well as oil services stocks.
We’re getting some mainstream support in our long-term thesis of rising oil prices: Goldman Sachs has realized that the oil juggernaut is launching, revising their short-term forecast to $75 a barrel – and they’ll be certainly followed by the rest of the banks.
They’ve re-read the tea leaves we’ve already figured out – a global demand picture that is stronger than at any moment we’ve ever seen before and a supply picture that continues to tighten.
The only ‘fly in the ointment’ that prevents all out hysteria in the oil patch is a stubborn mainstream belief that the oil companies will again make all the same mistakes they made in 2013 and 2014. Now that oil prices are sustainably above $50 a barrel, most of the analysts expect oil companies to use their new-found cash to rapidly increase capex and production, pushing to market every possible barrel that has a break-even of $50 or lower.…