May 24th, 2016
The market is moving up nicely today, as investors continue to play a Whac-a-mole version with the cute little creatures replaced by not-so-cute members of the Federal Reserve Board.
As the debate intensifies over whether the Fed is raising interest rates or not, the U.S. energy sector, already under pressure, is about to feel a whole lot more of it.
It makes no difference if the Fed raises rates in June, July, or September (nothing happens on this front in August). And it makes no difference whether we end up with only one or two more hikes this year.
Any way you look at it, a wide swath of U.S. oil and natural gas producers are going to take it on the chin. Bankruptcies, mergers and acquisitions, and asset sales one step ahead of the sheriff will be increasing.
That doesn’t mean there’s no profit to be made here… On the contrary, in fact.
But it does mean we have to tread carefully…
May 20th, 2016
Over the past few weeks, you’ve seen me mention oil pricing “floors” more than once. Judging by your emails, many of you would like to know more.
So today, we’re going to delve deeper.
But first, let me restate the crucial point: establishing a floor in oil pricing (a price that oil won’t dip below) is what generates the ability to make money – for oil companies as well as for you as an investor.
So you’re better off ignoring the anxious talking heads on TV who are concerned about whether oil will break the $50 a barrel “ceiling” or not. Instead, what’s important is that oil is now unlikely to dip below $42. That’s the floor – and your signal that a stable pricing band has formed.
And that price floor will make you far more profits than the ceiling, wherever it might be.
That’s especially true today…