Oil exploration companies positioned to take advantage of current oil prices, trader says
The energy sector has been through a rough patch, but it should not last long. In an interview with CNBC’s Trading Nation, according to Boris Schlossberg of BK Asset Management, this year’s best performance, which was the worst in July, is expected to retain the top spot, with investors realizing the extent of the imbalance between supply and demand from the energy sector.
Boris prefers the oil department of the Halliburton company
Boris told CNBC Trading Nation that despite concerns about the COVID-19 delta voltage to limit gains, once it is gone there will be an increase in demand with limited supply. His top pick in the industry is oil services firm Halliburton Company (NYSE: HAL) which he was long on thanks to a $ 19 to $ 22 buy spread that expires in November. The stock was on an uptrend on Friday, gaining 2.5% to $ 19.91. He said:
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“Even though it’s a hydraulic fracturing business in many ways, hydraulic fracturing at these oil price points is the cheapest since 2017, so I think it’s going to work really well.”
Boris said the company is also using cloud computing and AI to streamline its processes to make them leaner, which is an investment benefit. BK Asset Management’s Managing Director of FX Strategy added:
“All of this is going to translate into much better margins and profits for the company as we go along, especially if oil just stays at those levels. He doesn’t even need to rally. As long as he stays at 65 until the end of the year, I think we’ll look very golden with Halliburton.
Todd Gordon careful with energy stocks
West Texas Intermediate crude oil edged up to $ 69.63 on Friday. However, TradingAnalysis.com founder Todd Gordon told CNBC’s Trading Nation that investors should be careful with energy stocks. He said XLE was starting to lose popularity against the benchmark S&P 500 as the technology became popular. Gordon said:
“We’re going to need the energy for sure, but in terms of the portfolio, I would say no.”
He recommended those seeking exposure to consider production and exploration inventories rather than service and equipment sets. He added:
“Exploration and production is the industry to watch in energy, and if you want a name try a name like Devon.”
Devon (NYSE: DVN) on Friday opened 3% to $ 27.41.