Weekend Nov 19, 2017
Oil prices ticked up Friday morning after a week of losses, boosted by fresh signs that Saudi Arabia plans to back an extension of OPEC’s deal to curb global production.
Brent crude oil, the global benchmark was up 1.30%, at $62.2 a barrel in London midmorning trading. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 1.70%, at $56.08 a barrel.
“There’s been more comments from Saudi Arabia about extending output cuts, which brought that back to the front of [traders’] minds,” said Thomas Pugh, commodities economist at Capital Economics. “But that’s nothing more than what we already knew,” he added.
WSJ Energy Report
Relative Rotation Graph
This graph shows XOP, XES and RIG moving into the strongest are at right. I honestly thought we would have more correction but energy shares bounced back
nicely on Friday.
Energy Service Screen Shot
The only red is the energy service short. All others green which means an up day. XES had a solid 2.4% increase on Friday.
EVS British Driller
Like RIG this is coming off a ridiculous low having lost over 90% of its value since 2014. This will take patience but think like John Templeton.
Apache APA
Apache APA has been my bell weather for mid sized emerging companies. APA discovered oil in the Davis Mountains where there has been zero production before. Note this third higher low confirmed by RSI at top and PMO at bottom. This is a buy
Energy Point and Figure Chart
Bruce Fraser posted a great article on oil in the blog section of stockcharts.com on Nov 11 2017 at 8 00 AM. I highly recommend readers subscribe and read that article.
Based on Wyckoff analysis he makes the case for oil prices returning to 60-63 and then eventually back over $100. The bull is back.
Wyckoff analysis explained here.
Carl Swenlin at Decision Point thinks oil is bout to top out. I certainly respect his opinion. Crude jumped $1.54 or 2.79% Friday.
PBT Permian royalty Trust is worth bying at 9.24 with a 7.10% dividend.
I have prepared a list of Royalty Trusts with dividend rates. I am reluctant to post without examining the safety of the dividend, more later.
XOP Smaller diversified energy producers
The pullback and re test of the MAs offers an entry point here.
Iron Ore Cliffs natural Resources CLF
CLF is not the great buy it was at one dollar but this is a great chart entry point. CLF topped a year after bottoming at a buck.
It has now completed a rough 50% re-tracement to 6 bucks. Now look at the long term potential in the next chart.
CLF Monthly
CLF has been bottoming since 2014. Granted the PMO and RSI are not encouraging but this is a slow moving monthly chart.
CLF was 100 when oil was 145. Just buy this and put it away.
Natural Gas UNG
UNG is not ready to go yet. The MAs need to come together and then the shorter need to turn up.
ESV Ensco
ESV has been making higher lows since its low last August. Like RIG it is in the early stages of recovery.
ESV Monthly
This is called POTENTIAL. The sellers should all be out. See daily chart above.
Frontline FRO
Note how the MAs are coming together.Now we need PMO to bottom and turn up. I suggest start accumulating now. Did I mentionthe9% dividend?
Bottom Line
The blog will be focusing on energy issues as that looks like the best bet for the New Year. We favor accumulating the shares mentioned in this report.
Social Mood
My wife mentioned an HBO special that was supposed to be bout raising money to fight autism. Perhaps so but it featured Chris Rock, Jon Stewart, and even Edie Falco using the F Word to tell her son to stop watching the show. Good manners are in a state of social collapse. Where is Jerry Lewis when you need him? Jerry was always a class act.
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