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Bulls Pile Into Whiting Petroleum Corp (WLL) as WTI Rockets

Whiting Petroleum Corp (NYSE:WLL) shares have rallied over 3% today on the back of higher WTI prices. As of early afternoon trading, the front month WTI contract has rallied 1.66% to trade at $48.51 per barrel. Although the API hasn’t released its inventory data estimate out yet (the consensus expectation according to Reuters is for a 1.2 million barrel build), traders have bid up the energy commodity due to a quarter of a million barrel per day drop in Libyan oil production due to geopolitical conflict between armed factions. Past disruptions to Libyan production have lasted anywhere from several days to almost two years. Although many analysts expect the conflict to not last long due to the low oil prices, stranger things have happened. Sentiment in crude has also improved due to the Iranian oil minister saying that an extension of an OPEC cut is likely, although the minister later qualified his statement by saying that the subject will need to be discussed in depth first.

Given that it is far more competitive at $50+ per barrel WTI, Whiting Petroleum Corp (NYSE:WLL) benefits from the higher WTI prices. Not only does a higher oil price lower WTI’s net debt/expected EBITDA, but also higher prices increase Whiting’s margins.

What Does The Smart Money Sentiment Say?

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see details here).

Hedge fund sentiment in Whiting has been pretty much as push. Of the 742 elite funds we track, 34 funds owned $934.4 million of Whiting Petroleum Corp (NYSE:WLL) and accounted for 27.30% of the float on December 31, versus 35 funds and $635.86 million respectively on September 30. Israel Englander‘s Millennium Management initiated a new stake of 12.5 million shares while John Griffin‘s Blue Ridge Capital upped its stake by over 600% to 11.6 million shares.

The Bottom Line
Whiting Petroleum Corp (NYSE:WLL) shares have surged due to renewed WTI strength. If sentiment continues to improve and WTI bounces back, the rally could continue.

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