Saturday, February 2, 2013

ITZ Weekend Update: Crude Oil

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Crude oil (WTI) has been on a nice run the last several weeks, now nearing $100 a barrel. ITZ had suggested Proshares Ultra Crude Oil ETF (UCO) with a PT of $33 & $35 [those that use suggested stop exited @ $30.50]. ITZ portfolio has taken 1/4 positions via Proshares Ultra Short Crude Oil ETF (SCO) entering at $37 & $36.

This weekend we take a look at the Russell 1000 Energy Index ($RIENG) and a few of the stocks in that index. Below is a weekly chart, showing a breakout from an Ascending Triangle formation, PT $90 and then $100. A closer look into the index shows the move has been fueled by several refiners such as HES, HFC, PSX, TSO & VLO. Shares of oil refiners rose as key companies reported rising earnings on cheaper U.S. crude oil. Now that oil is approaching $100 bbl, look for some profit taking on those stocks.

Even though ITZ view currently is to be short WTI crude oil, it continues to like a few energy companies, like National Oilwell Varco (NOV) although it reported great earnings Friday, beating estimates and raised a yellow flag for the coming quarter. There was some selling on the news, ITZ was stopped out but re-entered the position on the decline. Another driller that is favored, is Halliburton (HAL).

ITZ list of faves also includes Cameron Int'l (CAM), the second-largest oilfield-equipment maker in the U.S., rallying after orders for new gear almost doubled. Denbury Resources (DNR) billionaire George Soros initiated a position in Denbury during the third quarter of 2012.

Beneficiaries of the shale gas boom like Dresser-Rand (DRC) a player in the LNG compressor industry. Other oil companies on the list CVX, OII & SLB.

Russell 1000 Energy List LINK


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