5 Energy Stocks To Buy With Incredible Momentum

The U.S. Energy Department's weekly inventory release showed that crude stockpiles recorded a huge drop.

As per the federal government’s EIA report, oil inventories decreased by a massive 14.51 million barrels for the week ending Sep 2, 2016, following a rise of 2.28 million barrels in the previous week.

The analysts surveyed by S&P Global Platts – the leading independent commodities and energy data provider – had expected crude stocks to go up some 425,000 barrels. A sharp decline in imports and improvement in refinery demand led to the big stockpile drawdown with the world's biggest oil consumer.

Following the bullish data, West Texas Intermediate (WTI) crude futures jumped 4.7% (or $2.12) to settle at a two-week high of $47.62 per barrel Thursday.

A One-Off Event?

However, the outsized one-week drop – largest in 17 years – is being referred to as an isolated event. It largely resulted from a tumble in net imports as Tropical Storm Hermine moved into the Gulf of Mexico and prevented tankers from docking. In fact, imports into the U.S. Gulf Coast fell to a record low of 2.48 million barrels per day on account of delayed offloading of cargoes.

Therefore, the market reaction might be temporary with oil supplies likely to register a big jump in this week’s report as those ships which were interrupted from unloading last week unload.

In summary, the oil market is set to continue its topsy-turvy ride.

Future Remains Uncertain

One thing the oil market downturn has taught investors: nobody has much visibility into the future. So, when you think of something as a clear line of sight one quarter, it can soon be overshadowed by an unforeseen event.

We all know that 2015 was brutal for the oil industry with U.S. crude futures ending last year 30% below the 2014 level, which itself was 46% below the 2013 level.

This year has been more of the same.

The uncertainty in the energy markets have continued in 2016 with a lot of volatility. Oil prices recovered from a 12-year low of $26.21 a barrel in February to $50/barrel mark in early June, slipped again to under $40 only to rally toward $50 once more.

1 2 3
View single page >> |


How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.


Leave a comment to automatically be entered into our contest to win a free Echo Show.