By Michael Wuetherick, P.Eng. User Group Leader: Red Deer Alberta Jan.11, 2015
Energy Sector Update – Are you trying to pick a bottom, here are some insider tips?
The price of crude oil, and the price of stocks focused on the energy sector, has continued to fall since my last Blog post on November 17th. Since that time, the OPEC ministers (i.e. Saudi Arabia) have repeatedly stated their intentions to regain market share. But how can you find out when the war might end?
Members of the Red Deer, Alberta VectorVest users group recently learned how to access up to date drilling and production reports from the US Government Energy Information Administration (EIA) webpage. The EIA publishes monthly regional drilling productivity reports for each of the major US shale plays. These reports outline the number of current rigs drilling, and equally important the productivity estimate from these new wells. The rig data for each major play can be accessed as follows:
|EIA webpage link
As you can see, new-well productivity continues to increase as completion techniques are improved. Therefore it will take a much deeper drop in rig counts to truly see an impact on weekly production totals. You can again refer to the weekly crude production report available from the EIA which can be found at:
US production has risen to all-time record high of 9.132 million barrels for the week ended January 2, 2015 up from 9.077 million barrels at the time of the OPEC announcement. Until this upwards trend reverses, we will not have a true bottom in the crude markets.
If you are like most Canadians you either already own energy stocks or can’t seem to avoid wanting to call the bottom. But if you must own energy stocks, how can VectorVest help you find the best sector to be in and when. Using the Delta search on price, I prepared the following summary of the best and worst performing industries in the Petroleum sector from July 1, 2014 to current.
Lastly, you might be surprised to see that some Exploration companies have drastically outperformed their peers. Using the Delta sort again on the best and the worst producers since July 1, 2014 produces the following list.
The oil industry is a fast-paced, complex world but that doesn’t mean that you can’t effectively trade this important sector for short-term gains or longer term dividend investments. By combining the tools of VectorVest, and some sound fundamental research you have all of the tools the pros have!
May the trend by with you….
YOUR COMMENTS PLEASE: Are you buying petroleum stocks yet?
What stocks are in your Watchlist?
Michael Wuetherick, P.Eng. Red Deer User Group Leader, VectorVest Canada January 15, 2015