The combination of slowing oil demand growth in China and other key markets and surging output from US shale plays—and their implications for global spare productive capacity—has sent crude prices plummeting.
Although crude-oil prices have caught a bit of a bid over the past few days and oil-field services and upstream names have benefited from a bout of short covering, the near-term outlook suggests that crude-oil prices will remain below the elevated levels that became the norm in recent years.
Meanwhile, any moderation in production volumes associated with anticipated reductions to capital expenditures won’t show up for several quarters, especially with operators focusing development activity in their core acreage and pushing for 15 percent to 20 percent price breaks from service providers.
And with US producers able to sink high-probability new wells within a week, this shadow capacity should keep a lid on oil prices in the intermediate term, assuming OPEC maintains its output levels and no major disruptions occur in the usual hot spots.
Against this backdrop, the demand side beckons. Our favorite hedge against lower crude-oil prices–a name that we added to our Model Portfolio in January 2014–has soared by 41.6 percent since the end of the third quarter.
In this issue, we highlight our top picks in several industries that stand to benefit from extended weakness in crude-oil prices and offer exposure to other company- and industry-specific growth trends.
We also highlight an opportunity for investors to lock in high yields on securities that actually stand to benefit from potential dividend cuts in the upstream space.
These picks will work in concert with our top picks in the energy sector to deliver solid returns during a period of heightened volatility.
Surging production in the Marcellus Shale has also created challenges for producers and has important implications for investors and natural-gas prices in other regions.
Investors still flock to initial public offerings of master limited partnerships.
US propane exports have soared to a record high--and there's more upside to come.
With winter just around the corner, many investors and market observers wonder whether we’ll witness another spike in Midwest propane prices.
Warren Buffett's biggest investment mistake holds an important lesson for investors eyeing value opportunities in the energy sector.
We pounded the sand for Hi-Crush Partners LP in early 2013, when the stock was a high-yielding value play. Today, investors need to take their heads out of the sand and sell.
Unless we stand on the cusp of a new ice age, investors shouldn't expect a sustainable rally in US natural-gas prices.
SeaDrill has given up 36 percent of its value since the start of September, yet some uninformed market pundits continue to pound the table for the stock. These five myths about SeaDrill could cost you real money.
The stakes are high for the masters of midstream, particularly in the Northeast where surging output of natural gas has overwhelmed local demand and existing takeaway capacity, depressing the prices at Pennsylvania’s Leidy Hub relative to the Henry Hub in Louisiana.
Elliott and Roger on Dec. 19, 2014
Balanced portfolios of energy stocks for aggressive and conservative investors.
Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.
Our assessment of every energy-related master limited partnership.
Roger Conrad’s coverage of more than 70 dividend-paying energy names.