"We sense a turn for the better coming in the oil sector," says Peter Way who tracks 'big money' investors for his Block Trader Oil & Gas Report. Here's his look at the "big block" traders.
"When we use the hedging analysis employed in our stock price forecasts, there are significant differences between some adjacent futures expirations. Here's the current picture:
"Front month (November) hedging suggests likely near-term higher prices. But the December contracts are likely to continue the past 3-month price decline – briefly.
"After that we could see crude rise over a few months into the $115-125 area or even higher, providing a bullish backdrop for most energy stocks. We sense a turn for the better coming in this sector.
"Several issues are selling at attractive prices now. Among major integrated producers, the standout prospect among the big oils is Petrochina (NYSE: PTR).
"Among independent exploration & production companies, we see many stocks selling at prices that offer attractive Reward to Risk prospects. In addition there is always the background likelihood of acquisition by one of the majors, although timing of those events is difficult to call.
"Offering odds-weighted net return potentials at double our minimum expected investment hurdle rate are Range Resources (NYSE: RRC) and Talisman Energy (NYSE: TLM).
"Oilfield services and transportation stocks seem to be drawing more than usual attention from the million-dollar market-makers.
"It may be that their clients are turning to the industry's support operations, which are essential, but in a period of declining commodity prices do not have ownership of the energy resources. Current political agitation for renewed offshore drilling may also play a part.
"Best positioned at present appear to be Weatherford International (NYSE: WFT), Diamond Offshore Drilling (NYSE: DO), Drill-Quip (NYSE: DRQ) and National Oilwell Varco (NYSE: NOV)."
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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Reader Comments (Page 1 of 1)
10-27-2008 @ 3:56PM
Iridium said...
If oil goes back to $120 can we really take all of these guys outside and do a tapdance on thier faces.
The hedge scam was exposed. Oil at $140 was trading at 4 times the true value. Any future runup is just going to be the same baseless hedge trading that helped to put the economy in the tank.
The world economy is not viable with oil trading above $50. That is a fact.