Is it time to get into oil plays now that the winter heating season is in full swing for much of the U.S?
Answers
117 points
JohnLansing answered 11 months ago …
I often say that there's always a bull market taking place somewhere, but there's also a bubble building somewhere, too.
When stocks are getting bid up for little to no discernible reason, like we're seeing in some energy names, then we've got the makings of a bubble that's set to blow.
There ARE some downright-juicy setups in the commodities sector – but only for those traders on the short side. I've been recommending that my Parabolic Options members buy put options in some of the biggest energy names that are still imploding from the energy bubble bursting.
But with so many energy stocks rolling over at a rapid rate -- for example, Goodrich Petroleum (GDP), which dropped 15% in one day recently -- many "market mavens" are calling for a bottom. That is, they believe there's nowhere for these broken stocks to go but up.
But I urge you not to believe them for a minute. What I see, based on my technical analysis, is that many oil stocks will keep sliding down a very slick slope.
Oil may be making fresh new 52-week lows, but it's limbo-ing lower almost daily.
I anticipate that oil, and the broader energy complex itself, will continue getting slammed as de-leveraging and deflation continues to take its toll.
2222 points
readytoretire answered 11 months ago …
At this point, I think you are too late to try to play the winter heating season. About the only way to play this heating season is if you think the general concensus is wrong on the weather, that it will be significantly colder or warmer than predicted.
As the market tends to look ahead, you should be thinking about the summer driving season. Will the economy be back enough for the amount of gasoline to be way above what is currently estimated, or will it be flat and the inventory of gas continue to build.
3963 points
MNSL answered 11 months ago …
Johnlansing has given some good points.
I completely agree with following two statements.
I often say that there's always a bull market taking place somewhere, but there's also a bubble building somewhere, too.
I anticipate that oil, and the broader energy complex itself, will continue getting slammed as de-leveraging and deflation continues to take its toll.
Now bull has created for some few sectors and few stocks. They are slowly appreciating. Some sectors are going down further.
Oil will come below $25 sooner than later. We will have worst year for many commodities and assets in 2009. Commodity currencies and assets will tumble in the next 18 months.
These some gurus, top banks, funds and top oil analysts can not forecast correctly in correct time.
Even some are trying to promote forcefully some ETFS, investment, markets and countries. They have vested interest in those countries, in their investment products and in their currencies etc.
This is the time to change ETF, banks, sectors, fund mangers, money mangers and insurance and retirement providers etc.
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678 points
BoxCar answered 11 months ago …
Winter heating has a minimal effect on stock price for natural gas companies as they
seem to plan ahead (knowing winter's coming) and build up reserves for the load.
Do a 3yr chart on CHK and APC and see last 2 winters had little effect on price,
probably because some power plants use natural gas to cool off cities in summer
Also NG is combined with air (N2) to produce ammonium nitrate fertilizer, another
huge usage of NG that is geared towards the growing season, spring thru fall. So
NG consumption is somewhat constant year round despite bump up in winter.
As for OIL consumption, remember that FUELS account for only half of the use of
a barrel of Oil, the other half goes into plastics/synthetics/paints & asphalt. With a
drop in retail sales of houses, cars, appliances, PCs, etc all the things made of OIL
and truckers cutting back 20% in speed (40% fuel consumption) and fewer trucks
making deliveries of fewer goods, then a cascade of Demand Destruction occurs.
So you can't expect Oil to rebound anytime soon. It was Haste makes Waste and
I'm afraid the Party's Over as every company faces "DownSize or CapSize"
Fed's policy of BailOuts only serves to "Float the Bloat" and prolongs the agony..
3963 points
MNSL answered 11 months ago …
Yes BoxCar is correct. There is demand destruction for oil, commodities, and other assets including property. Prices of some assets will fall further in the next 18 months. Sooner than later property prices will come down dramatically almost all the Asian region
We hear almost everyday job cuts globally in sectors such as technology, commodity industry, electronic industry, auto industry, banks and other sectors etc.
Only few sectors including rotating sectors will outperform market in the next 06 months, next 18 months and next 05 years. We can not expect broader bull market except sector oriented bull market in the next 05 years.
