• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Energy

This Will Be the Last Time Down for Oil

So this will be your last opportunity to target some great oil companies.
By DANIEL DICKER Aug 25, 2016 | 01:27 PM EDT
Stocks quotes in this article: EOG, XEC, CLR, HES

We've tried to work inside a very long-term and a relatively short-term strategy when it comes to investing in the oil space: Inside the long term, we've been identifying the winners from the losers in the coming fresh oil boom, which I believe will send prices above $100 by the end of 2017. In the short term, we've noticed the vagaries of the financially and rumor-driven oil price that has prematurely inflated many of those stocks, and we've taken a break from investing in those companies until a better value price can be found. 

Now that a good part of the rumor mill has quieted down and the speculative trade has as well, we're starting to see oil move again toward the mid to low $40s. 

This, however, will be the last time down for oil -- and your last opportunity to target some great oil companies. 

It's one thing to have a long-term strategy and invest accordingly, but quite another to time those trades effectively. Since a terrible year ended in 2015, I've been having increasingly better success this year in timing entry and exit points, and much of my experience and analysis tell me the coming mini-crash in oil and oil stocks will be the last one we ever see. I've lightened up in virtually all of my best independent U.S. E&P positions, but readying myself again to deploy into them as prices on oil drop (I hope) again toward $40.

All of the hopes of a September production freeze from OPEC and non-OPEC members are correctly fading. The dollar, which has stabilized in the last few sessions, looks ready to rebound higher again.

Speculative oil buyers have increased their positions far ahead of the fundamentals, indicating that they're a bit early to the party. Stockpiles increased by 2.5 million barrels last week, and production is not yet falling off fast enough to clear the market of continuing huge gluts -- at least not until another chokehold of $40 oil puts some of those producers back onto the sidelines. When oil again begins approaching $40, we'll again hear the wrong chorus of oil never seeing $70 and of oil companies fit to survive sub-$50 prices. Just like the last time in the spring of this year, that will be the time to add to positions again. 

And I think it's the last opportunity like that we'll ever see. 

I want to create new targets on independent E&Ps where I can again increase positions. I want to see EOG Resources (EOG) get close to $85 before adding again, Cimarex Resources (XEC) nearer to $125, Continental Resources (CLR) to $40 and Hess (HES) to $53. I'd rather miss these targets than overpay for oil companies that have reached stock prices that correspond to oil in the $60s rather than nearer to $50. 

Patience in the short term will lead to the better returns we're looking for in the long term.

Thank you to those who've expressed interest in my interactive webcast, beginning this fall. More info will be coming after Labor Day. And if you might have interest in this service but have not yet submitted your email, please do: dan.dicker@thestreet.com

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Dicker was long EOG, XEC and CLR, although positions may change at any time.

TAGS: Commodities | Markets | Energy | Investing

More from Energy

Saudi Arabia Has Only One Objective: Higher Oil Prices at Any Cost!

Maleeha Bengali
Mar 5, 2021 10:00 AM EST

For now, they have achieved their objective, showing President Biden firmly who is in charge.

Listen to Mr. Market, Not Mr. Powell

Jim Collins
Mar 4, 2021 1:56 PM EST

Let's look at bonds, rates and, especially, inflation for a true picture of what's going on, and where to put your money.

Jim Cramer: There's No Stopping the Electric Gold Rush

Jim Cramer
Mar 2, 2021 7:10 AM EST

You can't lip service electric vehicles anymore. Exxon's board moves indicate it knows its gasoline days are numbered.

Is Chevron Finally Ready to Make an Upside Breakout?

Bruce Kamich
Mar 1, 2021 1:44 PM EST

Let's check out some charts on the energy giant.

No Longer an 'Aristocrat,' This Dividend Stock Still Looks Pumped

Bob Ciura
Feb 25, 2021 2:30 PM EST

Suncor Energy has a bruised but energizing 3.0% yield.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:38 AM EST GARY BERMAN

    The INDU and DIA

    FIBOCALL: The INDU index and the DIA The INDU ...
  • 10:44 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    "The Challenge of Short-Selling"
  • 08:40 AM EST PAUL PRICE

    Recent Pick SpartanNash (SPTN) Raised Its Quarterly Payout by 3.9%

  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login