When was the last time you saw EOG beat AMZN two days running?
Next week we’re kicking off a reboot of the entire Energy Word and the dandicker.com website – you may have already seen some changes. And what a week to premiere the new content and services !
Monday’s action in the markets was – well, not a first – but a very rare event in the past several years, and one that requires some serious thought.
It isn’t often that energy stocks are the leading sector in any day’s trading – at least not since around 2014. We saw all the major averages down on Monday, except for energy stocks, which managed to gain ground.
Many folks would say that this was just a reaction to the OPEC+ decision to hold the line on the production increases they all approved a little more than a month ago. Now – you ask me – this was hardly an unexpected meeting result. OPEC rarely changes course quickly and without warning. And while those production numbers might have provided a nice catalyst for investors to pour money into oil and oil stocks, it’s hardly the bottom line reason that stocks like EOG Resources completely annihilated Facebook and Amazon – and are having another blockbuster day on Tuesday as oil approaches $80 a barrel.
I’ll tell you what it is, though – it’s that long comeback on oil and other fossil fuels that won’t quit – the one that I’ve been telling you all about since December of 2020.
All of those signals of supply destruction that have been building for the previous five years are coming home to roost – all the decimation in US Shale, and all the disruption in OPEC supplies – all of it is now being seen in the rocketing price of oil.
Much of this was hidden from most other observers, fooled by a hopeful rush to renewables, and a new President with his climate change agenda. While many of us, including me, would love to see a world that relies a lot less upon fossil fuels and the environmental damage they cause, there is a reality of how ubiquitous petroleum products are in our modern lives and just how fast we can reasonably remove them.
Particularly in a world where the demand for energy is only growing – and growing FAST, even through a pandemic.
We see this energy supply disaster most clearly in Europe, where energy to major European capitals are being held hostage to the captive supply of Russian natural gas pipelines. But energy is a global phenomenon, and even the United States, despite it’s energy riches, is looking at domestic suppliers that have been mortally weakened in the last 6 years, and can’t (and shouldn’t) ramp up supplies to ease these $80 prices.
What does this mean to us? It means what I’ve been saying for the last two years: That well-structured, relatively debt-free US independents will represent some generational investment opportunities in good ol’ oil and gas.
Like the aforementioned monster EOG Resources – a core holding pick of the Energy Word for most of the last two years.
Oil? I’ve heard it all before – It’s going the way of the dodo, leaving us as wood and whale oil did before it, doomed to crash on the hot technology of solar panels and windmills and the Teslas of the world………
When oil stocks outperform some of those hot tech stocks, you have to say to yourself, hmmmm………maybe not so fast.
That’s what we’ve been saying here at the Energy Word for a long time now.
