Last week’s spike in volatility was difficult for every investor, especially after a period of unprecedented placidity during which many market participants forgot the terror that these swoons can induce, even if US equities were overdue for some profit-taking.
For better or worse, the highs and lows of this down-cycle have accustomed energy-focused investors to bouts of sharp volatility. Nevertheless, the selloff in energy stocks was still harrowing, with the S&P 500 Energy Index giving up all the gains it had chalked up in the first month of the year.
Energy stocks appear to be suffering from a case of déjà vu. Last year, the sharp recovery in US crude production and the oil-directed rig count, coupled with money managers taking profits on their sizable long positions in Brent and West Texas Intermediate (WTI) futures, conspired to send WTI tumbling to as low as $42 per barrel.
On the surface, a similar dynamic is at play today.
In the past, we’ve argued (correctly) that market participants and investors who bet against the resilience and potential upside in US oil production do so at their own peril. However, with the market now accustomed to these upside surprises, investors shouldn’t overlook the potential constraints on US production growth.
NuStar Energy LP's 45 percent distribution cut provides yet another sign of the changing of guard underway in the midstream industry. That said, amid all this pain, we remain selectively bullish on master limited partnerships.
Anadarko Petroleum and Pioneer Natural Resources announced dividend increases and share buybacks earlier this week, signaling a commitment to capital discipline and returning capital to shareholders. But concerns about US production growth and the near-term risk posed by the massive long position money managers have amassed in Brent and Wext Texas Intermediate futures have ruled the day.
We examine some of the key takeaways from Enterprise Products Partners LP's fourth-quarter results and earnings call and Parsley Energy's widely panned operational update.
Midstream heavyweight Kinder Morgan (NYSE: KMI) kicked off fourth-quarter earnings season for the energy sector last week. Here are our thoughts.
We narrow our Focus List and dig deep into our picks' fourth-quarter results to kick the tires on our investment theses.
Fourth-quarter earnings season is in full swing. Recent results and developments have prompted us to adjust our buy targets on a few holdings.
he S&P 500 may have reached new highs in 2017, but our call for a bumpier ride couldn’t have been more wrong: The index hasn’t experienced a correction of more than 5 percent since summer 2016—the longest uninterrupted rally in its history. We explain our base case for US equities in 2018.
Our call for the US economy to expand by 2 to 2.5 percent in 2017 panned out, thanks to strong growrth in the second and third quarters. We look at historical data and trends in some of our favorite leading indicators to challenge some popular wisdom and develop a nuanced economic outlook for 2018.
We leaned against the consensus outlook for oil prices twice last year, expressing skepticism toward the rally that occurred in WTI after OPEC announced its production agreement and turning bullish in July. These calls were directionally right. Here are our expectations for 2018 and the risks to our outlook.
Elliott and Roger on Feb. 27, 2018
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.