Tuesday, October 21, 2014

Oil Sell-off, the Goldman View (XLE; ERY)

We are seeing a lot of recommendations to buy hydrocarbon companies and want to note:
It's Too Early
More to come.
From FT Alphaville, Oct. 17:
Oil sell-off, the Goldman view
Ever the market-moving contrarians, Jeff Currie and team at Goldman came out with a note on Thursday doing for oil markets what Bullard and Haldane have been doing for markets in general.

When it comes to the oil price decline it is, they say, too much too soon. And, critically, the issue is on the expectations side NOT on the current market supply side:
The recent sell-off in oil has been mostly driven by positioning based upon expected fundamental shifts as opposed to currently observable shifts. While looking into 2015 we have sympathy for these medium- to longer- term bearish views that have driven prices lower, we believe it is too much too early. Prices have also likely overshot to the downside particularly as the lower we go the tighter the near-term balances become. This leaves us near-term constructive despite being bearish as we look further out.
In other words: this is not the oil market price crash you’re looking for. Move along, move along. The curve should not be in backwardation. It should be in lovely yield-generating contango. Why is the market being such a fool?...MORE
Oct. 15
Snapping Back At The Close: Energy, Biotech, Solar
Oct. 9 
"Energy Stocks Are Crashing As WTI Plunges Under $85"
Oct. 2 
Options: "Transocean LTD Trader Bets Big On Steeper Losses" (RIG) 
Sept. 30 
Chartology: "Energy- Worst performer over 90 days is on channel support" (XLE; ERY; XOP)