Crude oil prices are on a path to highs not seen since 2014, in step with one chart analyst
As the energy sector tracks for its best quarter on record with a year-to-date gain of nearly 40%, there’s “clearly some upside” for oil prices as well, Piper Sandler’s Craig Johnson told CNBC’s “Trading Nation” on Friday.
U.S. West TX Intermediate crude prices slid half of 1% to around $65.60 a barrel on Friday.
“I could truly see the variety that would be north of a hundred within the next, say, six to … twelve months from here,” said Johnson, his firm’s senior technical analysis analyst.
The Energy chooses Sector SPDR Fund (XLE) is additionally showing signs of life when a tough 2020, he aforementioned.
“There is clearly a double bottom that has been created and even a better low that has been made,” he said, citing a chart of the 23-stock exchange-traded fund.
“We’re obtaining a multi-year reversal in terms of the performance of the XLE compared to the S&P 500. Clearly, there are some terribly positive trends happening here,” he said. “These are longer-term themes and trends that are beginning to unfold.”
One smaller name might see oversize edges from those trends, Johnson said.
“Don’t ignore the mid-and capitalization stocks, too, as a result of they’re additionally collaborating within the action,” he said, inform to a chart of exploration and production company Cimarex Energy.
“To us, it’s such as you might have quite 40% upper side to urge back to the previous highs in 2018,” he said.
Cimarex shares closed nearly 2% lower at $65.14 on Friday. A 40% run from those levels would bring the stock to around $91.20 a share.
With OPEC probably to stay production steady until a minimum of the summer, economist Tengler Investments’ metropolis Tengler was also expecting a surge in oil prices.
OPEC and non-OPEC allies to review oil production cuts after dire demand warnings
“We don’t see any offer increase till October, which suggests the value of oil will run pretty handily from here. Our expectations are somewhere around $80 a barrel within the summer, so, that’s optimistic for many of the oil stocks,” she aforementioned in the same “Trading Nation” interview.
Tengler’s firm owns Chevron, which she was known as “best at school in the integrated house,” Diamondback Energy, Phillips 66, and a number of alternative stocks in the space — and she or he plans to exercise caution going forward.
“Those stocks have run dramatically,” she said, highlight Diamondback’s 69.5% run this year. “When it’s time — and that we don’t think it’s time — we expect you fade a number of those stocks that are extremely leveraged to the value of oil and you hold onto quality within the last half of the year, which would be one thing like Chevron.”
JPMorgan named Chevron and Exxon Mobil its prime picks among the oil “majors” on Friday, citing bigger price potency and speech communication record leverage might come back to pre-pandemic levels this year.
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