About Me

Retired chief investment officer and former NYSE firm partner with 40 years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Thursday, February 27, 2014

Oil Price & Industry Stocks

Last year was a comparative breeze to trade oil. This year could be a little trickier. Normally,
the oil price would be primed for a seasonal lift off right now that would, with the usual mid-
year lull, take the price up to its annual high by the end of Sep. However, with severe winter
weather here in the US, WTIC crude aborted the normal seasonal decline in Jan., and is up
about $10 a bl. to the $102 area as Feb. closes out. There is no  worrisome technical over-
bought in place, but with a return to more seasonal, milder weather, there could be a decline
down to $95 bl. over the next couple of months.


I have not shelved the projection of faster global economic growth as 2014 wears on, so the
idea of some further and significant upward progress in the oil price to, say, the $120 -125
area seems doable at this point. Moreover, natural gas, which has tanked in recent days as
folks realize winter is not going to last forever, should still hold an uptrend through most of
the year.


Here is the chart for West Texas crude: $WTIC Weekly The bottom panel shows the relative
strength of the XOI oil composite which should be nearing the end of a lengthy period of
poor relative performance for the group in the wake of the 2007 - 2009 oil bubble / bust.

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