My one-hundredth-and-thirty-second YouTube video “Trend of the Week Give “Em the Cash” went up today. So far, so good this earnings season: oil and natural gas producers are holding the line on capital spending on new production, as they promised, and returning the huge increases in profits from the jump in oil and natural gas prices resulting from the Russian invasion of Ukraine and the sanctions slapped on Russian energy exports. And they’re returning those profits, as promised to shareholders as dividends. Big dividend payouts. Look at Pioneer Natural Resources (PXD), for example, which beat earnings for the first quarter and raised its dividend payout to what amounts to better than 11% annualized. I think we’ll see this trend continue for a while, especially as many CEOs stick to the path of putting fewer resources into new exploration and production because they can’t be sure how long the current level of prices will last.
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.
Yesterday’s optimism about a cease fire in Ukraine and peace talks turns back into pessimism (realism?) today
Hopes for a cease fire in Ukraine and for serious peace talks between Russia and Ukraine took the stock indexes up yesterday and the price of oil and oil stocks down. News of renewed Russian shelling today took the market back down and oil and oil stocks back up today.
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)
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?
Norwegian oil and natural gas producer Equinor (EQNR) said Wednesday, March 16, that adjusted permits from the Norwegian government will allow higher natural gas production over summer from the North Sea Troll and Oseberg fields as well as the Heidrun fields in the Norwegian Sea. With European countries looking for alternatives to Russian natural gas Equinor can basically sell all the gas it can produce even at higher prices. Natural gas futures closed at $4.81 per million BTUs today in New York. That’s up from $3.80 on January 20. That’s a 26.6% increase. I added Equinor to my Volatility Portfolio back on January 21 as hedge against a Russian invasion of Ukraine and wide-reaching sanctions. That position is up 23.14% as of the close on March 18.
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?
I’m starting up my videos on JubakAM.com again–this time using YouTube as a platform. My one-hundredth-and eighth YouTube video “You should own more commodities” went up today. We all know that oil and gas prices will rise even more as a result of the invasion and you’ve probably added oil and natural gas stocks to your portfolio. I recommended that you do that back in January. But did you know that aluminum prices will soar too? Same with zinc. And wheat. The list goes on. There are a few individual stocks – like LNG and AA – I recommend to get yourself on top of this situation, but I also recommend looking at commodity ETNs like DJP which include agriculture as well as energy stocks in one basket.
I expect extreme volatility in oil prices this week. A Friday deadline looms for an agreement on the Iran nuclear program that would remove U.S. sanctions on Iranian oil. Every rumor of yes a deal, no deal will send oil prices tumbling or soaring. And a Sunday meeting of European foreign ministers on whether or not to shut Russia out of the SWIFT payments system would also likely sink of spike oil prices since this is the since this is the system European countries use to pay for Russian oil and natural gas.
U.S. crude benchmark West Texas Intermediate rose above $90 a barrel–it closed at $90.87, up 0.60% for the day, for the first time since 2014. International benchmark Brent crude gained 0.42% to close at $91.53 a barrel. Of course, it took a wild confluence of events to push prices above $90.
I’m starting up my videos on JubakAM.com again–this time using YouTube as a platform. My eighty-fifth YouTube video “QuickPicks Conoco Phillips” went up today.
I’m starting up my videos on JubakAM.com again–this time using YouTube as a platform. My sixty-third YouTube video “Trend of the Week: Timing the Oil Stock Rally” went up today.