>> Inventories are an important factor. But keeping your eyes on inventory at the expense of the futures strip action, days forward coverage and expectations for future S/D balances has proven to be a mistake. <<
I didn't say that you should ignore the future strip. What I was saying is inventories do matter. Back in early 2004 when inventories approached 260 million barrels we were told, no problem, because of modern, lean, "just in time" stock management at the refinaries meant that inventories could be near historic lows without supply problems arising. Now a year later those same modern, lean, "just in time" refinaries have 320.7 million barrels of inventory. Nine weeks of inventory builds can't be ignored.
>> Look at NG for the last year and look at the chart for the NG 18 month strip. <<
I do look at the futures strip on a regular basis and while the long term trend is bullish.
futuresource.com
The short term chart looks less positive
futuresource.com
You can go broke waiting for the long term depletion story to bail you out of an ill timed buy.
I stopped buying E & P's in November, and in February and March I sold and took my profits in Callon Petroleum, Comstock Resources, Energy Parners LTD, Forest Oil, Magnum Hunter, Newfield Exploration, and Pioneer Natural Resources.
All those stocks were part of the trading half of my portfolio and had hit the price targets I had set when I bought them. Magnum Hunter was an exception in that I raised my target price after
the merger news was announced. While I don't agree with dabum's pure TA style and distain for FA, I do agree with him that a smart trader takes his profits while he has them.
I continue to hold Suncor, Encana, Ultra Petroleum, Western Gas Resources, and Imperial Oil
as part of a longer term Oil depletion, NA tight gas market play. I would like to add more Suncor
and add Opti Canada and Encore Petroleum when the price is right.
I added to my holdings of RDC on Friday because even if oil and gas prices pull back further, they're not likely to pull back so far as to change the drilling plans of the E & P's. |
