Impacts on the Energy Sector


Author Larry Berman

Posted: 28 Mar 2012 re-posted from etfcm

The rising costs in the energy patch and increasing stress on nat gas prices seems to be having a significant impact on the energy sector despite the fact that WTI is trading at $100+.

We saw a presentation today that suggested the realized revenue on a barrel of Oil Sands gunk is less than $70 and costs are running in the $60 range, so not too surprising that the sector is trading under a bit of stress right now. Now that WTI cannot hold the war premium it has built up, that would suggest the XEG could easily trade back to $15 all things being equal (ceteris paribus)—which of course they are not.

Gold could hug its 200-day average like it did for a few weeks last month when it was trying to rally back, which suggest the gold stocks could struggle a bit too. We know seasonals for gold stocks are not strong until summer months.

 

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