Why Big Oil Looks to Be the Best Energy Bet for 2019

With all the media naysayers, doom-mongers and haters in general against the oil & gas industry, here is something joyfully a bit against the grain.

Since I'm not a trader (never have been, never will be - I'm interested in projects and production) I certainly won't vouch for anything in this article.

Just enjoy a bit of sunshine and cheery news about global oil & gas. 

Or, if you are one of the oil haters, go ahead and work yourself into a triggered frenzy.  Whatever rocks your boat ...b08c540fcd82ba187926556a1a242da6212074b332124ff7a80869fc9b0bb684.jpg.69986d936ccda9d7c71fd2be141528ea.jpg

 

Here's an excerpt, much more details in the link:

Why Big Oil Looks to Be the Best Energy Bet for 2019

Along with a vicious 20% decline and bear market status for the S&P 500, oil has taken even a bigger beating, at one point down 30% from highs posted earlier this year. Concerns touted by the oil bears include a glut of inventory in addition to slowing economic conditions. However, on the bright side, OPEC production cuts are expected to kick in early in 2019, and worldwide demand is expected to grow sharply over the next five years.

... We screened the Merrill Lynch energy research database looking for large-cap leaders rated Buy that also pay dividends. We found four that look like outstanding picks for 2019.

... ConocoPhillips

... Exxon Mobil

... Occidental Petroleum 

... Royal Dutch Shell

... With oil hovering near 2018 lows, these stocks are outstanding long-term buys for growth portfolios looking for income as well. With the sanctions on Iran fully in place, and the OPEC cuts coming soon, if we also see positive trade deal negotiations these top companies could take off.

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while I'm sticking to my $80-100/bbl; short term may have a room to drop - Art Berman says there is 3 month lag between oil price and shale oil production response. Growing US inventory won't help. And my price level will go to the drain in event of economic calamity which may get triggered shall market collapse will continue

Other than this, above blue chips would be a good buy. Oilfield service companies are more leveraged to change in oil price and offer better return - at a substantially higher risk

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Crude oil slide down further a bit and bounce back and recover and stabilize around $55-$60 towards the end of 2019. In 2020 , crude will gain some further ground and stabilize around $62. These tend $ 60 to $65 will continue till 2025 and after 2025 there will be huge land slides in crude price. Crude will come down to $35 and and stabilize at the band of $35-$40 for next 5 years. Crude will slide down to $20 during 2030 due to  complete conversion of electrical vehicles, global warming, arrival of clean fuels ( solar, wind, nuclear, electric, fuel cells, gas based fuels).

There will be huge repercussion on OPEC nations . OPEC nations must start building their economy beyond oil else their Govt. will collapse and civil war will start in those countries. Economic collapse in OPEC nations will leave billions of people dead and millions going homeless and jobless.

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😨

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As posted 2 weeks ago short term every increase in oil prices has been followed by a drop again. Short sellers...So I expect short term prices to drop to 40. The production cuts are relatively small and inventories will increase. High gasoline stocks already in place does not help either. OPEC will have to come with more dramatic measures to provide a floor. This will take time, but they have to. SA budget is based on 80, not 40-45. Simple maths support x % reduction in supply is at least 2-3 x % price increase. Anyway as Tom's article is related to oil stocks I agree with buying, but gradually. Exxon and RD best positioned I think. based on their NG and OIL mix. I rather wait for some more positive news as stock and oil market and is still down.

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There is a difference between an 'oil hater' and an 'oil skeptic'. The oil hater just wishes everyone would shut down oil extraction and we would all drive electric cars. The oil skeptic believes that progressively lower renewable energy costs are going to affect the energy markets in all kinds of unexpected ways, none of which are much help to supporting oil prices. Natural gas can displace oil for trucks and trains. Hydrocarbons can be manufactured from CO2 and water. Batteries are becoming faster charging, longer lasting, higher energy density, and safer day by day. Governments are mandating diesel phase outs, and are moving their cities to 100% electric commercial vehicles.

If oil firms use wind power to power their pumps and refineries, they're basically removing CO2 emitters, whether these are coal or gas fired power plants. If they're researching use of algae to synthesize olefins, then the oil remains but the pumping phases out, along with the long distance transportation and the geopolitics.

International airline traffic isn't going to convert to electric in our lifetime, at least with what any of us are aware of right now. Everything else, however, is subject to disruption.

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Warren Buffet I don't think agrees and I'd go with him really with his track history.

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1 minute ago, DA? said:

Warren Buffet I don't think agrees and I'd go with him really with his track history.

Warren doesn't think it's a good morning?

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At age 88, I think every day he wakes up is a good morning.

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Just now, Dan Warnick said:

Warren doesn't think it's a good morning?

Maybe but I was referring to investing in fossil fuels generally.

 

Just now, Dan Warnick said:

At age 88, I think every day he wakes up is a good morning.

At considerably less than that every time I wake up or am able to walk to my bed with most of my body parts intact it's a dam good day.

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In case it's not glaringly obvious, I'm very much pro Oil & Gas (and LNG) and damn proud of it.

Oil & Gas aren't going away any time soon.

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Global cooling due to decreased sun spot activity will have oil rallying.

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I would have to agree with parts of the initial article about betting on Big Oil in 2019. Long term though, is much more of a question mark. The listed companies above, along with BP in some sorts, have positioned 2019 to be heavy in shale, which will likely bring in "quicker" cash, along with investment/development in heavy duty off-shore or larger inland conventional fields (think coast of western Africa, GoM, Alaska) which they are hoping sets them up for the mid-to-late 2020s.  

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(edited)

9 hours ago, Will_K said:

I would have to agree with parts of the initial article about betting on Big Oil in 2019. Long term though, is much more of a question mark. The listed companies above, along with BP in some sorts, have positioned 2019 to be heavy in shale, which will likely bring in "quicker" cash, along with investment/development in heavy duty off-shore or larger inland conventional fields (think coast of western Africa, GoM, Alaska) which they are hoping sets them up for the mid-to-late 2020s.  

I would agree with some of betting, but I wouldnt go to far out. Mexico seems wanting in on the drillin' craze, as is Guyana. Production is just that, adding in another 2 to 3 mbd the price point may get squashed with current pace of all the oil producing nations production rates. OPEC will cut only 2 mbd and then ya have the cheaters. 

This last couple years sure have been interesting to say the least. Who's going to blink first? Who's economies are mainly oil driven? I am just guessing with watching trends for 40 yrs, that it's going to go up by May to around 56.00 WTI. Unless of some dictator gets stupid and starts a war. Honestly tho, in all seriousness, There plenty oil to go around and adding more will keep it from popping. Technology is finding oil in places never given a 2nd look. 

I am not too worried about my investments, Service will always be a necessary part of the program. As for investing in big Majors I tend to shy away, as Tom Kirkman keeps pointing out, Banks being banks will one day want their cabbage, not sauerkraut !! 

Edited by Old-Ruffneck
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(edited)

22 hours ago, Sukumar Ray said:

Crude oil slide down further a bit and bounce back and recover and stabilize around $55-$60 towards the end of 2019. In 2020 , crude will gain some further ground and stabilize around $62. These tend $ 60 to $65 will continue till 2025 and after 2025 there will be huge land slides in crude price. Crude will come down to $35 and and stabilize at the band of $35-$40 for next 5 years. Crude will slide down to $20 during 2030 due to  complete conversion of electrical vehicles, global warming, arrival of clean fuels ( solar, wind, nuclear, electric, fuel cells, gas based fuels).

There will be huge repercussion on OPEC nations . OPEC nations must start building their economy beyond oil else their Govt. will collapse and civil war will start in those countries. Economic collapse in OPEC nations will leave billions of people dead and millions going homeless and jobless.

Highly unlikely - given the vol in crude oil prices (any commodity for that matter), it will either go up majorly or go down severly. Comm prices (especially with large inter-linkage to fin markets now aka hedge funds) are very sensitive to news flow. Average annual prices may turn out to be stable but expect a lot of vol in-between (as we have already in 2 days of the new year).

Edited by AcK
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Big oil is global so it is always a prime target in unstable countries where they explore.   Exxon is currently under threat by Venezuela in Guyana where it has risked billions to develop offshore reserves.  When the majors get into serious disputes they usually run.  In this case Exxon's in bed with China so they feel protected from Venezuela's Madura who is also in bed with China, but in the end, Exxon will likely be pushed out.  The Majors may be a decent investment for some but they need production from big fields and these big fields are usually found in the unstable countries where big oil takes the risk and then finds itself running for cover.  Eventually, exploring and investing billions and finding giant reserves that wind up in the hands of others, impacts the company's bottom line. 

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(edited)

On 1/2/2019 at 2:18 AM, Sukumar Ray said:

Crude oil slide down further a bit and bounce back and recover and stabilize around $55-$60 towards the end of 2019. In 2020 , crude will gain some further ground and stabilize around $62. These tend $ 60 to $65 will continue till 2025 and after 2025 there will be huge land slides in crude price. Crude will come down to $35 and and stabilize at the band of $35-$40 for next 5 years. Crude will slide down to $20 during 2030 due to  complete conversion of electrical vehicles, global warming, arrival of clean fuels ( solar, wind, nuclear, electric, fuel cells, gas based fuels).

There will be huge repercussion on OPEC nations . OPEC nations must start building their economy beyond oil else their Govt. will collapse and civil war will start in those countries. Economic collapse in OPEC nations will leave billions of people dead and millions going homeless and jobless.

Where do you hear complete conversion to ev by 2030?? That will not happen no matter what your crystal ball predicts.  Although I do agree that SA and some other oil dependent countries should diversify their economies I do not foresee what you have predicted the outcome in your last paragraph, and I hope not.  I will see your outrageous prediction and raise you one.  By 2030 we will be exporting oil to martians on Mars 😂😂  Do you believe the hype of global warming and are you anti fossil fuels?

Edited by cbrasher1
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