Eric Nutall, partner and senior portfolio manager at Ninepoint Partners, is a guy I have followed in the oil makets for some time. He was on BNN last Thursday and gave his insights into why oil and oil service stocks are lagging while the oil price is hovering at near term highs.
https://www.bnn.ca/video/eric-nuttall-s-market-outlook~1348694
I am also a big fan of natural resource investors Goehring & Rozencwajg Associates. G&R is project ing an oil price of $100 per barrel this year. They publish their research and and it is free for viewing. From their recent quarterly report:
Since we first outlined our oil thesis one year ago, oil inventories have drawn by as much as 650,000 b/d relative to normal – a record rate. The market deficit continues to get worse, and 2018 should see inventories draw further. The inventory situation has finally reached the point where price action is expected to be significant.
Meanwhile, energy-related equities have lagged creating a tremendous investment opportunity. Over the last decade, conventional oil discoveries have lagged behind consumption by 250 bn barrels, and investors seem to think that shale discoveries will fill the gap. We take a contrarian view here, US shales will not be able to make up the shortfall.
I continue to maintain that the consensus is getting the oil supply/demand story wrong and that oil prices will be heading higher as we progress through out 2018. If I am correct, than oil and oil service stocks are tremendous values at their current levels.