Will Energy Prices Continue Holding These Lows?

Natural gas price may have set its low for the cycle on January 15. If so, it follows the low for oil set in late December and for stock prices of oil and gas income and small cap stocks set in November and early December. It is a fact that those lows have held so far. It can only be an opinion that those lows would hold longer.

Even if it takes longer to set the lows, we are confident in the appealing investment value offered in our buy recommendations Canadian Oil Sands Trust (COSWF.PK), Cimarex (XEC), and Hugoton Royalty Trust (HGT). In case it does take longer before an uptrend resumes, our remaining recommendations are rated hold, including Penn West Energy Trust (PWE), Encore Acquisition (EAC) and San Juan Basin Royalty Trust (SJT). Similarly, unrated stocks in our coverage that also have low McDep Ratios offer long-term value for an investor to capture today subject to the risk of delayed gratification. Latest median McDep Ratio for seventeen stocks is 0.65. Median Distribution Yield estimated for the next twelve months for thirteen income stocks is 8.9%.

Originally published on January 16, 2009.

Comments

[Conan the B...:]

Seasonality is about to come into play for NG, meanwhile intraday lows for WTI have breached $40.

Whatever stimulus is passed, it will have no effect on current oil needs which will continue to decline with the economy.

So short term, I expect the Weekly WTI to join the daily lows previously experienced. My opinion, the low $30s.

Feb 09 06:06 AM

[scfranklin94:]

It's hard to believe that NG has set it's low for the year when all indications are pointing to storage being full two months early in the late summer. NG is getting some support from the coldest winter in the last ten years, but it's only hope this summer is super hot temps and a very active hurricane season.

Feb 09 09:32 AM

[Conan the B...:]

scfranklin: not only that but our economy is still the world's biggest user and is still getting worse.

Today an OPEC comment drove oil up by more than 5% but it still managed to close down for the day.

Sure sounds like an Intraday Reversal to me, the Trend is down.

Feb 09 05:07 PM

[Jim Hawthorne:]

Long on predictions but very short on analysis! You owe us more!

Feb 14 12:53 AM

[Ames Tiedeman:]

The volatility in the Canadian Oil trusts has been greater than the volatility of oil itself the past several days.

Feb 25 08:05 AM

[einstein p ...:]

Will energy prices continue to remain low? In a word --- no. Demand destruction is secondary to supply destruction in the long run and any number of events ---- an upturn in the economy, geopolitical unrest, a natural disaster ---- could elevate prices up to the old highs and significantly higher.

We should develop the energy --- oil, natural gas, coal, wind, solar, and the oil sands ---- in the USA and Canada. It's the smart thing to do. The stock prices in these companies will benefit, along with our own national security.

Mar 01 02:05 PM