FiGambler

Author: figambler

Thoughts on OPEC+ meeting this week

Posted on Modified on by figambler

The oil market is in a tough spot right now. The recent price increase already has OPEC+ extending cuts priced in. If OPEC+ decides against extending cuts, oil prices will drop vertically. It will take months before excess oil inventory is removed and thereby delaying oil market rebalance.

Currently OPEC+ cannot agree on extending cuts beyond January, and this is spooking the market. I anticipate volatility in O&G equities until a consensus is made.

Thoughts

Reading from credible twitters and sources, with some analysis, I’ve listed several outcomes in the order of most likely to least likely.

  1. OPEC+ agrees to a partial extension of cuts
  2. OPEC+ does not extend cuts
  3. OPEC+ agrees to a full extension of cuts

If OPEC+ does not extend cuts, oil prices will drop likely back to $30s. Not good

If OPEC+ agrees to full cut, oil prices will increase such that production can be brought online. Not good either.

If OPEC+ agrees to a partial cut, oil prices may stay in a steady sweet spot such that excess inventory continues to decrease, and high cost producers cannot bring production back online.

I think I will buy the volatility because low cost producers will be just fine.

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A lot of bullishness in the oil market, but let’s not start chasing too soon.

Posted on by figambler

Oil Supply and demand should balance out in Q2 2021 though we could see a balance as soon as Q1 2021.

In the past 2 weeks, we’ve seen a rise in O&G equities, and to me, this is exciting — but seems like all too soon for my liking. I’d like to build up a bigger position first.

Frontera Energy ($FEC.TO) is one of my favorite companies since it should NOT be valued at ~280M CAD. See why here. Frontera share price rosed from a low of $2.02 on Nov 6, 2020 to $2.90 on Nov 23, 2020 – 0.88 CAD increase or 44% up in 2 weeks!

Have the Oil Bull market begun? No, I suspect the rise in O&G equities recently is led by short term investors and traders. There will be slight pull backs for us long term investors to buy in.

Be patient, buy on pull backs, and don’t chase all the way. I admit, I chase a little due to FOMO. Typically, I chase with small buys, and buy big on pull backs in this market.

Best of luck in the Energy Sector!

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Random Thought with CV19

Posted on by figambler

When are we going to get the vaccine!!? Well, here’s a status update.

source: https://www.wsj.com/articles/covid-19-vaccines-whats-coming-and-when-11598882964

Thoughts

What are the chances that all 10 vaccines fail in Phase 3? No clue.

But if I have to think from a country leader’s point of view, one of these vaccines must pass testing and get approved. I’m not going to let testing drag on for years. This vaccine should have been tested and approved yesterday. I’m willing to take calculated risk and sacrifice a small group of people for the vaccine to succeed. Leaders don’t succeed from ‘playing it safe’.

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