Investing

is now the time to invest in oil stocks?

  • Last Updated:
  • Sep 20th, 2017 9:12 pm
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Jr. Member
Aug 16, 2015
105 posts
11 upvotes
I'm scared of dividend cuts, i won't be averaging down until oil is sub 40.
Newbie
Nov 25, 2009
80 posts
17 upvotes
Vancouver
Oil is set to rise. Venezuela has 10 B left in its budget with 3.7 it must repay. US prod is slowing down.

I hold wayy too much stuff that relies on oil to succeed. What are you guy's thoughts?
Jr. Member
Jun 28, 2016
187 posts
74 upvotes
lawonga wrote:
Jul 17th, 2017 12:43 am
Oil is set to rise. Venezuela has 10 B left in its budget with 3.7 it must repay. US prod is slowing down.

I hold wayy too much stuff that relies on oil to succeed. What are you guy's thoughts?
I'm also seriously overweight in oil/pipelines/oil price exposed banks at the moment. On the subject of Venezuela, I suspect that their oil production will be the last thing to go, as it's all that's keeping the lights on. Having said that, most analysts project they'll still lose at least 200,000 bpd of production this year (they lost a bit more than that last year). On the other hand, Libya and Nigeria have added almost 500,000 bpd in the past couple of months, and they've been talking about adding another almost 400,000 bpd by the end of they year. I don't know whether their luck will hold for that long, but, if it does, that's a pretty big downside risk.

On top of that, if OPEC goes back to full production next March, then there's potential for another oil price crash in 2018, even if shale growth slows down. So, in the next 18 months, while there are a lot of catalysts for upside (security situations deteriorating in Libya/Nigeria again, Venezuela crashing harder than anticipated, shale production slowing due to lower prices, accelerating depletion in older oil fields, extremely low exploration investment) it may take a couple of years for these to play out. Barring a major recession (which is quite possible) I have high hopes for oil between now and 2020, but there's lots of volatility on the way between now and then.
Sr. Member
Nov 28, 2010
856 posts
116 upvotes
Brampton
Energy finally went up with XEG up almost 3%. Just need it to go up some more so can sell some more
Deal Addict
Nov 2, 2013
4590 posts
802 upvotes
Edmonton, AB
lawonga wrote:
Jul 17th, 2017 12:43 am
Oil is set to rise. Venezuela has 10 B left in its budget with 3.7 it must repay. US prod is slowing down.

I hold wayy too much stuff that relies on oil to succeed. What are you guy's thoughts?
It'll go back up. Just no one knows when.
Sr. Member
Jul 13, 2007
529 posts
122 upvotes
Toronto
lawonga wrote:
Jul 17th, 2017 12:43 am
Oil is set to rise. Venezuela has 10 B left in its budget with 3.7 it must repay. US prod is slowing down.

I hold wayy too much stuff that relies on oil to succeed. What are you guy's thoughts?
Wouldn't Venezuela produce more oil if they're having money problems?
Are you sure you wish to carry out this operation? You betcha.
Jr. Member
User avatar
Nov 3, 2008
179 posts
69 upvotes
National Capital Reg…
HammerRFDer wrote:
Jul 24th, 2017 7:02 pm
Wouldn't Venezuela produce more oil if they're having money problems?
In theory yes, if they spend on infrastructure. Currently they use every dollar to keep lights on, which becomes a cycle of diminishing returns. Aging wells produce less, less money coming in, no money for reinvesting into new wells.
Jr. Member
Jun 28, 2016
187 posts
74 upvotes
HammerRFDer wrote:
Jul 24th, 2017 7:02 pm
Wouldn't Venezuela produce more oil if they're having money problems?
No. Venezuelan oil production is very capital intensive and requires foreign expertise (which costs money) so they can't even maintain production without massive investment. However, at present, the interest on their debts exceeds their oil revenue, so they're stuck in a catch 22. To pay their debts, they must raise production. But they can't raise production because they have no money, and no one will lend them money, as everyone knows that they can't pay their debts. Consequently, as they have no money to sustain their oil fields, production just drops and drops.

Realistically, I would guess that they'll manage to renegotiate with creditors before they default, but that still won't let them raise production. It just means that they'll end up barely hanging on while giving all their money to creditors rather than utterly imploding (and utter implosion is still a possibility). It doesn't help that their government keeps talking about trying to solve its problems by nationalizing the stakes of what few foreign oil companies are brave enough to operate there (this will absolutely make their problems worse, if they try it).
Jr. Member
Aug 16, 2015
105 posts
11 upvotes
Finally. A good day for CVE.

GXO Is awesome. Love it. Best oil stock.
Jr. Member
Jun 28, 2016
187 posts
74 upvotes
jerryhung wrote:
Aug 1st, 2017 11:54 am
and oil just randomly drops -3% mid-day, funny, $50 is one big resistance wall

Most TSX stocks haven't recovered to where WTI last traded $49-$50 though..
It's not random. OPEC (led by Libya) increased production by 210,000 bpd last month (according to a Bloomberg survey). As Libya's the biggest downside risk in this market, that caused the market to tank. Think about it this way: last month, Commerzbank was projecting 700,000 bpd draws through the second half of the year. Now, if we believe the survey, they should be projecting 500,000 bpd draws. That's a huge change in where they project inventories will be by the end of the year.
Newbie
Nov 25, 2009
80 posts
17 upvotes
Vancouver
So my Canadian resources just shot up 4%...
Jr. Member
Jun 28, 2016
187 posts
74 upvotes
lawonga wrote:
Aug 3rd, 2017 10:35 am
So my Canadian resources just shot up 4%...
Me too. It was a good earnings report this morning, and they upped guidance.

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