Issue 24 – Energy in The Dog House
Oil prices took a 4% nose dive on Wednesday after the bearish DOE inventory numbers were reported. The bears are definitely in the driver’s seat, and any bad news can ignite an aggressive sell-off in the commodity. The DOE U.S. Crude oil Inventories reported a draw of -1661k and the market was expecting a draw of -2300K. A 4% drop seems a bit aggressive. However, when sentiment is considerably negative, panic selling is not uncommon. A sell-off in the commodity leads to a sell-off in the E&P’s. We are quite selective in picking E&P stocks and ensure that specific criteria is met before inclusion into the funds. Discipline is especially important when there is negative sentiment in the sector and the underlying commodity is under stress.
Charles has been featured in the Growth Story Podcast by David Inzlicht. To listen, go to: