Oil futures hint at problems for E&Ps, but analyst likes EOG and Noble Energy

|About: EOG Resources, Inc. (EOG)|By:, SA News Editor

Exploration and production companies tend to track crude oil prices, J.P. Morgan's Joseph Allman says, so look no further than the current state of the oil futures market for a reason to be bearish on the sector.

WTI oil futures, which decline every quarter in 2014 and beyond, suggest an off year for the E&P group, Allman writes, noting that the set-up could be similar to 2012, when WTI was down 7% for the year and the S&P was up 13%.

That doesn’t mean that some oil stocks can’t outperform: Allman likes EOG Resources (EOG) and Noble Energy (NBL) among large caps for their “resource expansion and improved operations.”

His least favorite stocks in the sector include Anadarko Petroleum (APC), Devon Energy (DVN) and Chesapeake (CHK).