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Flash Alert: Gas Up

There are plenty of potentially bullish catalysts that the market has totally ignored. Chief among those, the US gas-directed rig count has collapsed at a pace and magnitude that’s unprecedented. It took several months for producers to hook up wells drilled during the drilling boom last year. But most producers believe the falling rig count will begin to have a profound effect on US production as we move through summer.

Recent Issues:

The Politics of Carbon

Most in the media hailed the House of Representative's passage of climate change legislation as a major victory for President Barack Obama. Clearly, the president lobbied hard for bill to clear the House before the July 4 holiday; the president is trying to push both health care and climate change legislation through Congress this year. In this issue, we'll take a look at how carbon legislation is likely to affect your energy investments and look at a handful of companies that may actually benefit from carbon cap-and-trade.

Buying Opportunity

The catalyst for the next upturn in global stock and commodity markets will be a realization that the US has exited the recession and the Chinese economy is reaccelerating again. I am looking for the rally to resume in the final months of the year.

The Drilling Dozen

As commodity markets stabilize, the groups most leverage to this recovery tend to be services and contract drillers. I've written extensively about services companies in the past few issues of The Energy Strategist. In this issue, we'll take a closer look at one of the most widely watched--and poorly understood--sectors of all, the contract drillers.

$70 Oil: Myths and Reality

Oil's rally was a major topic in the financial media on Tuesday and Wednesday, and a long list of pundits have attempted to explain the recent rally in crude prices. Many analysts asserted that oil's run-up has little to do with fundamentals of supply and demand, citing murky arguments related to the weaker US dollar and speculative fervor. But fundamementals are still at the heart of oil's recent move.

The New Super-Cycle

Because of constrained supply and reviving demand, the energy patch looks to be in the early stages of a major advance. Gains to date have been impressive, and I’m wary of the potential for a 5 to 10 percent correction at some point before fall. But such a pullback would be a buying opportunity. Valuations remain under control and, if history is any guide, there’s a lot more upside to come.

Supply Takes the Driver's Seat

Understanding the broad roadmap for energy prices is important, but making real money investing in the group requires delving into the specifics of each commodity market, identifying the best-placed sub-sectors going forward. Here’s a detailed rundown of my oil and natural gas price forecasts and the prospects for four key energy sub-sectors and how to play each group.

Energy Questions and Answers

As always, one of the most enjoyable and useful aspects of the show from my perspective has been the question and answer (Q&A) sessions that follow each of my presentations and panels. These questions give me a window into what investor sentiment is toward energy and various sub-sectors.

A Turn for the Better

In the first stages of every bull market, underlying fundamentals look negative. The market is a forward-looking mechanism, always searching for hints of change in the air and signs of improvement, not watching current conditions. The market will typically lead the fundamentals by several months. This is exactly what’s happening right now in the energy patch.

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