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A new report by Imperial Capital analyst Bob Christensen focuses on the latest developments in the energy sector. Imperial's outlook for the space centers on the firm’s believe that crude oil prices are poised for another breakout to the upside in the next few months.

Headlines Rule

According to the report, headlines about Greece and Iran will likely continue to drive oil prices in the near future. Christensen believes that this trend will likely continue until “something more meaningful” happens that affects the global oil supply/demand balance.

Past The Peak

Christensen believes that the worst of the global oil oversupply glut has now passed and sees a tightening of oil fundamentals that are in-line with Imperial’s models.

“We think we are now past the peak of the oil surplus, which likely occurred in February 2015 at 2.1 MMbbl/d or 2.3% over then current demand,” Christensen explains.

Bullish Data

The most recent weekly U.S. drawdown data was better than expected, coming in at 4.9 MMbbl versus expectations of 1.7 MMbbl. In particular, Cushing, Oklahoma crude oil inventory drawdown was 1.9 MMbbl versus expectations of only 0.7 MMbbl. Christensen believes that Cushing is the key focal point when it comes to U.S. unconventional shale oil production and U.S. refining. Drawdowns in Cushing represent bullish indicators of falling U.S. shale output or growing U.S. demand.


Imperial is calling for WTI crude prices to approach $70/bbl by the end of 2015 and believes that “oil can break out to the upside again in the next few months.”

Rising oil prices would come as a relief to many industry names, and Imperial has Outperform ratings on the stocks of WPX Energy Inc (NYSE: WPX), Anadarko Petroleum Corp (NYSE: APC), QEP Resources Inc (NYSE: QEP), Stone Energy Corp (NYSE: SGY), Gastar Exploration Inc (NYSE: GST) and Synergy Resources Corp (NYSE: SYRG).

Latest Ratings for WPX

Oct 2016BarclaysUpgradesUnderweightEqual-Weight
Oct 2016Evercore ISI GroupUpgradesHoldBuy
Oct 2016FBR CapitalInitiates Coverage OnOutperform

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Posted-In: Bob Christensen imperial capitalAnalyst Color Long Ideas Commodities Markets Analyst Ratings Trading Ideas


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