This Week in Energy: The Bull Case in the Near-Term

Perhaps due to the fact that it agreed to sell its deepwater Gulf of Mexico assets before the OPEC news and perhaps because copper futures haven’t exactly been lights-out bullish, Freeport-McMoRan Inc (NYSE:FCX) shares only rallied by 2.1% on the week. Although the price action has been disappointing, the stock has considerable upside if crude prices can make their way to $60 per barrel or higher. Freeport still has some interesting oil and gas assets that will increase in value if energy prices recover. Carl Icahn‘s Icahn Capital, which has cut its stake in some other energy companies this quarter for ‘tax planning purposes’, has remained steadfast in Freeport-McMoRan Inc (NYSE:FCX) according to publicly-available data. Icahn’s fund held 104 million shares of the company at the end of June.

Although the Bakken isn’t the most cost-competitive place to produce shale oil in America, Bakken producer Oasis Petroleum Inc. (NYSE:OAS) was certainly one of the big winners this week, as shares of the company surged by 25%. Given that over one-in-five shares in Oasis’ float was short, OPEC’s surprise announcement likely precipitated a short squeeze. Although it isn’t exactly competitive while WTI is at $40-to-$45 per barrel, Oasis does become very competitive at $50-$55 per barrel or higher, as that level is generally above the company’s break-even price. 33 funds in our system were long Oasis Petroleum Inc. (NYSE:OAS) at the end of June, up by four funds from the end of March.

Are you bullish on oil in the near-term? Will OPEC deliver on its promises? Let us know in the comments.

Disclosure: None