Equity Feature : Good Oil Hunting
A chat with my broker friends has given me this idea to write about oil and oil stocks. I have been busy trading the oil story too, riding the Sembcorp Marine proxy before last Friday’s dip in oil prices finally despite the initial euphoria after the ECB’s massive liquidity injection announcement.
My futures broker friends say they have been getting calls from stockbrokers inquiring on behalf of clients on how to invest in oil futures and stockbrokers telling me that customers in Singapore have little choice in oil plays with really only 3 main stocks to consider – Keppel, Sembcorp Marine and Ezion (of all things ?).
The rest of the small to medium sized oil related companies are generally not good proxies as far as investors are concerned, being the favourites of the stock punting world.
Futures volumes in NYMEX Brent contracts surpasses 200k daily trading volume for the first time ever with 2015 averaging daily volumes of 152k vs 50k this time last year, according to CME Group. A clear sign indeed that speculators are getting involved.
Yet the month of January has only brought on bad news as the oil price collapse since June last year brings drillers to shutter their rigs and cut jobs across led by Baker Hughes (6,000) and Schlumberger (9,000) as BHP cut their shale rigs to reduce cost and keep dividends.
Examining oil price performance so far.
And the performance of Big Oil is hardly affected.
Singapore and Malaysia oil and gas companies mostly underperformed.
Links to last year’s articles :
https://tradehaven.net/market/the-oil-story-to-2020-and-beyond/
https://tradehaven.net/market/the-oil-story-continued-where-is-the-pain/
6 themes shaping the oil & gas market in 2015 http://bit.ly/1yTjIyE
1. The financial challenge of low prices
2. Debt management is a critical priority
3. Intense cost cutting
4. Potential for a buyers’ market in M&A in 2015
5. Is this a golden opportunity for long-term resource capture?
I can trade WTI and Brent futures on the IG CFD platform.. contracts are only valid 1+ month, so one will keep having to roll them for a longer term position.
You can actually do the futures too for the contracts further out but it gets illiquid after 6-9 months.
And of course, the exchange traded options.
CAD denominated royalty trust / oil producers are a good way to get exposure to any oil price rebound.
You get both asset reflation + currency kicker.
CAD is at an all time low due to the RUB fallout + Oil fallout. A little unjustified considering that it’s a beautiful, peaceful country with abundant resources.
CAD is part of the USD Index, and a look at the monthly AUDCAD, NZDCAD, CADSGD currencies charts should prove instructive.
I am assuming you are a structural SGD base, AUD base or NZD base investor, which many will no longer be given USD strength…..
The only worry is the future rate cuts implied in the curve. But at -6.6% for the CAD for 2015 so far against the USD …..
Oily mess š
Oil prices suddenly spiked more than 8 percent on Friday, in the biggest one-day price move for the volatile commodity in nearly three years.
http://www.nytimes.com/2015/01/31/business/energy-environment/oil-prices-surge-8-after-long-slide-down.html?_r=0
8% spike in last 45min of trading. That’s why futures trading is so dangerous.
Yahooooo !!!