I’ve seen several comments on the site asking this question. I assume we’re talking about oil stocks in the short- and medium-term. In the long term, I think it’s clear that you should be thinking about selling these out of your portfolio at a profit (of course) whenever you can. Demand for oil will fall in the long-term–defining long-term as 5 years or more–or we can all count on figuring out how to survive 120-degree (Fahrenheit) heat. Today, August 5, is a good synopsis of what’s going on with oil and oil stocks in the short- and medium-term.
Oil falls on surprise build in U.S. inventories in spite of a shockingly small increase in production from OPEC+
As of 2 p.m. New York time today, August 3, U.S. benchmark West Texas Intermediate crude was down 3.30% to $91.30 a barrel. International benchmark Brent fell 3.07% to $97.45 a barrel.
The drop was a result of Wednesday data from the U.S. Energy Information Administration showing that U.S. crude and gasoline inventories unexpectedly rose last week. U.S. crude supplies were up 4.5 million barrels in the week ended July 29, while gasoline supplies rose 200,000 barrels. This comes at a time when gasoline inventories usually fall on high seasonal demand. This report was, for the day, more than enough to offset the announcement of a smaller than expected increase in oil production by OPEC+ of just 100,000 barrels a day for September.
The Conference Board’s latest reading on consumer confidence showed consumer expectations in June fell to their lowest level since 2013. The consumer confidence index for June fell to 98.7 from 103.2 in May, below expectations for a reading of 100. The report’s expectations index, which is based on consumers’ short-term outlook for income growth, the job market, and overall business conditions, fell to 66.4, its lowest reading since March 2013.
It’s likely that the current “disagreement” about how fast Russian oil production is falling will be resolved in favor of “pretty fast” despite spin from Moscow. Which would mean that Friday’s jump in oil prices–West Texas Intermediate crude gained 2.165 to $110.60 a barrel–will continue. And so will Friday’s rally in oil stocks. ConocoPhilips (COP), for example, was up 4.69% on Friday. Pioneer Natural Resources (PXD) gained 5.35%.
Normally at this time of year natural gas prices retreat and companies actually stash natural gas in storage for use durin hurricane outages in the fall and winter heating season. Not this year, however. Today natural gas prices in the U.S. hit a new 18-year high. At 11:20 a.m. New York time natural gas for June delivery climbed to $8.08 per million BTUs, up 8.12% on the morning
Today, April 21, reports from a number of different sources are pointing to lower oil production–which will mean higher oil prices. Even from current levels. And oil prices are significantly higher in the past three weeks. At 3:00 p.m. New York time today U.S. benchmark West Texas Intermediate traded at $103.44 a barrel, up 1.61% on the day. On April 11 West Texas Intermediate traded for just $94.29 a barrel.
Stocks rally on bad inflation news in the morning and then give it all back (on second thoughts) in the afternoon
As of noon New York time today, April 12, the Standard & Poor’s 500 was up 0.47% and the Dow Jones Industrial Average had gained 0.34%. The NASDAQ Composite was higher by 0.73% and the NASDAQ 100 had moved up by 0.67%. The small cap Russell 2000 had tacked on 1.49%. And then by the close stocks had given up all these gains and more. For the day, the S&P 500 closed down 0.34% and the Dow was off 0.26%. The NASDAQ Composite ended lower by 0.30% and the NASDAQ 100 was down 0.36%. The small cap Russell 2000 managed to close up 0.33% on the day.
Don’t sell those oil stocks yet! Back at the beginning of the year, I anticipated that coming conflict between Russia and the Ukraine would drive up the price of oil, and the stocks I added to my portfoliohene stocks (COP, EQNR, LNG) have all been up big. But, I don’t think it’s time to sell yet. Why? Summer. Summer is the big driving season in the Northern Hemisphere, and right now (in what’s called the “shoulder season”) reserves of gasoline are supposed to be replenished in anticipation of summer. But that’s not happening due to Russia-Ukraine, and I think with summer we will see prices for oil spike even higher. That’s why I wouldn’t sell these stocks yet. (And that’s despite of the selling today, March 28, on more lockdowns in China)
The United States and Europe have reached an agreement to expand U.S. supplies of natural gas to Europe in an effort to reduce Europe’s dependence on Russian natural gas.
Details are bit vague. And wishful thinking is a big ingredient. The basis problem is that Russia supplies Europe with 150 billion cubic meters of natural gas every year via pipelines. U.S. and other sources can’t match increase production to that level and the infrastructure to get the gas to Europe simply doesn’t exist. Yet the goal has now been put on paper and the agreement promises that Europe will get at least 15 billion cubic meters of additional LNG supplies by the end of the year. Even though it is not clear where the natural gas welcome from or how ti will be delivered.
Oil rallied again today with U.S. benchmark West Texas Intermediate up 4.79% on the day to $114.79 a barrel and international benchmark Brent up 5.12% to $121.39 a barrel. So, natural, oil and gas equities stocks are up today. And the broader market is down. What else isn’t new?
The United States will ban imports of oil and natural gas from Russia, President Biden announced Tuesday. U.S. allies in Europe also announced action on the energy front with a plan to cut natural gas imports from Russia by two-thirds in 2022. Even though the White House has said that the long-lead time on the ban would give importers and consumers time to find other sources by the end of 2022, oil futures soared today with the price of West Texas Intermediate, the U.S. crude benchmark, climbing to $126.98 a barrel, up 6.35%, for April delivery as of 12:30 p.m. in New York. International benchmark Brent creek rose 6.52%to $131.24 a barrel for April delivery.
I suppose there is something else that could add to the supply of bad news today on oil supply, but we’ve already got a full dance card At 2 P.m. in New York U.S. crude benchmark West Texas Intermediate traded up 5.07% to $121.55 a barrel; international benchmark Brent crude was up 6.24% to $125.48 a barrel. Where to start?