In the Dec. 25, 2013, issue of Energy & Income Advisor, Commodity Price Outlook for 2014, we made the following prognostication:
With North American production of light sweet crude oil on the rise, investors should gird themselves for bouts of volatility that could entail a short-lived drop in WTI [West Texas Intermediate]—potentially to less than $80 per barrel.
At the time, we didn’t foresee a selloff as severe as the one that rocked the industry last fall; rather, we thought oil prices would come under more pressure than usual during periods of seasonal refinery outages.
We also worried that surging US production eventually could overwhelm domestic refiners’ capacity to process volumes of light, sweet crude oil.
But we still took steps to reduce the Portfolio’s risk, cashing out of SeaDrill (NYSE: SDRL) in fall 2013 and selling fracking sand specialist Hi-Crush Partners LP (NYSE: HCLP) in spring 2014 for a roughly 60 percent gain.
We also reiterated our Sell call on SeaDrill, a stock we first highlighted in 2007, on several occasions in 2014 and added American Airlines (NSDQ: AAL) to the Model Portfolio as a hedge against lower oil prices in January 2014. (See Why SeaDrill Still Rates a Sell, Five Myths about SeaDrill That Could Cost You Real Money and Buy the Friendly Skies.)
Last fall, we warned that the price of West Texas Intermediate (WTI) crude oil could slip to as low as $40 per barrel in early in 2015 and that further loosening in the supply-demand balance could depress prices to as low as $30 per barrel.
Although WTI hasn’t pulled back to this nadir, our forecast—reiterated in numerous issues of Energy & Income Advisor—for crude-oil prices to remain lower for longer has more important implications for investors.
Our outlook calls for WTI price to range between $40 and $60 per barrel for most of 2016—a forecast that we’ve reiterated numerous times during our monthly Live Chats.
Crude-oil prices enjoyed a brief relief rally from mid-March to early May, fueled by profit-taking and higher refinery utilization rates in anticipation of the summer driving season, a period of peak demand.
But elevated inventory levels in the US and the prospect of refinery outages for regular maintenance and upgrades has sent WTI lower in recent weeks.
With the exception of upstream operators, master limited partnerships have held up reasonably well relative to other groups in the energy sector. We survey some of the risks and opportunities.
Shares of US refiners have outperformed since oil prices swooned. Here's why and what's to come.
How US producers responded to plummeting natural-gas prices provides useful insight into how names with an oil-weighted output mix will contend with lower oil prices.
The price of a mixed barrel of NGLs on the Gulf Coast has plummeted by 45 percent since the end of the third quarter.
Fluctuations in the US dollar's value relative to major international currencies can influence crude-oil prices. But many more important factors are also at play.
We attended the National Association of Publicly Traded Partnerships' MLP Investor Conference and lived to tell the tale. Here are some of our key takeaways from the most important event of the year for MLP investors
Schlumberger's quarterly earnings call usually includes loads of useful insights for energy investors; the company's most recent conference call was no exception.
We'll be looking for value at the NAPTP's annual MLP investor conference.
The most important event of the year for MLP investors is just around the corner.
Elliott and Roger on Jul. 28, 2015
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.