[Covariance]

My allocation is equal weight CVE, CNQ, WCP and on the US side XOP.

 

[Covariance]

keep Whitecap sell the other 2 and buy Tamarack Valley and Enerplus . There is much. much more upside with these two. Check back in January and we will see who is right.

Will look into your suggestions. Thanks

 

[Covariance]

Where to go with this investment? It's hard to ignore the gains we've made and think maybe lighten up. On the other hand, if we ignore entry price and just focus on fundamentals - limited investment, declining production, inventories lower than 5 year historical averages - it looks very positive. For me it comes down to demand. If there is a recession all bets are off. I'm watching the Fed/CB action and other data for signals that indicate major economies will tip in or crash into recession.

 

[Covariance]

At what point does it become not-crazy to start worrying that we might get price controls and rationing?

If this is a US focused question the Dems are going to lose control of both houses in the fall. Now to then is the window of worry. Thereafter unlikely.

 

[Covariance]

I figure the markets are close to panic mode. Zero rational for the big drop in energy stocks. $118 WTI means they are making a gigantic amount of cash.

4

Not saying this is my trade - just providing an explanation of why many would be exiting energy producers. This is a classic sector rotation trade of an investor repositioning for recession. Fed action in conjunction with real time signals of economic activity drives a rule based shift of asset allocation. Sell commodities on expectation of lower demand from contraction of economy.

 

[Covariance]

I am tempted to add a little CNQ on the pullback for a st trade. I would like to see oil fall to maybe $100 as forecasts are for $95 for 2023 YE oil. I didn't want to buy when oil was at $120 which seems a peak.

I know they hedge 60% too. Is this a good time to add say a 1/3 of a position ?

I added today, along with WCP. Note: Monday US is closed for a holiday. may become thin this afternoon.

 

[Covariance]

That balance is LNG, not oil. The Qatar North Field is natural gas. It is the largest in the world and shares it with Iran (called South Pars in Iran). North Dome / South Pars gas field

The new project referred to in Exxon's comments is Qatar Signs Deal With Total For Expansion Of Gas Field In Persian Gulf The expansion of 6 additional LNG trains is world scale.

I prefer to stay engage in oil only for this reason. While linked in some ways the price of the two have different drivers, vol.

 

[Covariance]

My immediate reaction is to go back to one's thesis. Is it a multi-year perspective on oil, or is it a day trader buying/selling on momentum and technicals. Then what's different if anything. Sure Putin pulled ahead some returns. And people rushed in and then ran away. But what's the game plan? Back to basics.

 

[Covariance]

I use fundamental, rather than technical indicators, but none the less they also pointed lower in the short term.

 

[Covariance]

Do you think it might be finding a floor here?

A technical trader would be tempted to buy at the support level and possibly gamble on the 200 day average holding.

I'm not quite there yet but very close. I'm waiting until after the Fed meeting next week, and insights from SP500 earnings calls in the interim before pulling making any moves. A Fed induced recession is the bear case.

 

[Covariance]

Look at how bond yields absolutely cratered today. Very interesting.

Both the US and Canadian 10 year bond yield plummeted.

First we saw long term inflation expectations come down, and this week the ECB has finally started to increase rates now as well. Thus we have a concerted group of CBs moving up rates at various cadences. Slow down in global GDP if not outright recession is the expectation. Classic move in long treasuries in response.

 

[Covariance]

You might want to follow what’s happening in inventory from the impact of the drawdown of the SPR, and the drawdown of the SPR itself. This can only be putting downward pressure on crude, and will need to let up at some point. Probably not before the elections. But eventually it will end.

 

[Covariance]

Capitalism doesn't care about climate change, about the increase in wildfires, about the draughts, the drying of lakes, about temperatures going up to 50 degrees.

Until their own houses burn, until they are themselves restricted in water consumption, the rich don't care. Even there, they won't care as they have the money to build a new mansion elsewhere and buy bottled water.

Then, someday, their great-great-grandchildren will suffer, but they still won't care because they'll be dead anyways, huh.

Echo of Lenin, "The Capitalists will sell us the rope with which we will hang them."