06-04-2017, 03:20 AM
But better times could be ahead, says Fundstrat's Thomas Lee. He offers three reasons: "Oil futures moving into backwardation, bullish for Energy stocks—in the past, this was a sign that oil supply/demand fundamentals are moving into balance," Lee writes. "Energy CDS and high-yield spreads have rallied strongly in 2017, reflecting improving fundamentals and spreads consistent with oil market in stable backwardation," Lee says. "Energy stocks have lagged severely, and is the only sector in the S&P 500 where equity and CDS/HY have diverged—past divergences favor a catch-up in the equity," Lee writes.
Time to Buy Oil Stocks? - Barron's
The oil-rich Permian Basin is emerging as a major source of new natural gas, a development that could deepen an existing glut and pressure gas prices for years. The West Texas region has become the most prolific spot for horizontal oil drilling and fracking. The new oil wells also produce natural gas, making it a nearly free byproduct that energy companies can then sell on top of the more-sought-after crude.
The Oil Play That Could Flood the Natural-Gas Market - WSJ
The real question, of course, is not how long the announced cuts will remain in place, but how long can this herd of cats be kept in compliance with the cuts? The simple answer is that as long as the cuts are supportive of prices and data starts to finally flow regarding a significant draw-down in inventory the various members of the OPEC/NOPEC output cut team will play the compliance game. Resolve and discipline will falter in a scenario where prices spike or fall considerably.
How Much Will Inventories Shrink As OPEC Extends Cuts? | OilPrice.com
The latest OPEC meeting was uncharacteristically tranquil, with little of the eleventh hour infighting and arm-twisting that has been so prevalent in previous meetings. The cooperative spirit has allowed OPEC to roll over its production cuts for another nine months, as expected, a move that has to be described as a successful outcome. "Nine months with the same level of production that our member countries have been producing at is a very safe and almost certain option to do the trick,” Saudi energy minister Khalid al-Falih told reporters. Yet the oil markets are unimpressed.