Goldman Sachs says $40 oil first half of the year but $65 to $70 in the second half of the year and this story is catching some headlines.
I’m not sure how Goldman gets a free pass to be all over the road on oil but I’ll at least agree with much of this calendar.
Volatility remains in the price and hitting $40 on WTI not that far away from another bad headline, but overall we are largely there. Risk/reward is to the upside. But let us focus on Brent, “the worlds blend”.
What does this look like?
The chart looks like a chart where oil is oil… is bottoming… or at least finding a base…?
Price is NOT truth. The second half of 2015 will be the period the market wakes up to that.
Is early wrong right now?
Not if you are investing in world class companies who have seen 10 oil price cycles like this over the last 40 years and have balance sheets to support any capex or margin pressure and are not overly levered now: TOT, CVX, RDS, COP, HES (reported today)
HES with a big miss (.18c v .23c) is important to look at because kind of kick off the earnings season for this corner of the world and based on the oil price move we all know it will be challenging on the top and bottom lines… No kidding.
Take a look at operating quarters, however, note where capex is coming back and capital discipline will test many.
Hess has one of the best balance sheets in the sector and is moving towards higher quality project. Cost will drop for these best of breed operations. Hess has 30% upside once the oil price bases. Is that now? And lets not forget MUR reports after the close today. RDS Oil (UK) reports tomorrow followed by Chevron Friday. Next week Monday we get hear from Exxon. The one stay away from is BP as its getting hit from all sides with Russia, Horizon penalties and of course lower oil prices.