Is the Energy Sector Set for a Bounce Back?
Energy stocks were a group closing higher on the session as oil breaks its 9 day losing streak and posts its largest percentage gain since late November. Is this the sign of a bounce back, or just a temporary pop?
Joe Terranova thinks there may be a small bounce back here, but advises people that the real story in the energy sector right now is natural gas. Crude oil is bouncing back in a one day timeframe, but the market still has an inventory overhang, 'massive' contango and the dollar rallying, which has dropped the commodity around $7 since Thanksgiving. Although Terranova does not advocate selling or shorting oil, he thinks it's set for a further pullback heading into January based on index weightings, which are set to shift their exposure away from oil and to natural gas.
Nat gas is a great story because it was such a terrible story, says Tim Seymour, who cites recent big gains in the commodity as evidence that the Exxon Mobil deal to buy XTO Energy makes sense. Adding to this, Gary Kaminsky is extremely convinced that energy stocks will be the out-performers in the market because of the M&A activity happening right now. People are buying into these names because they want to participate in potential M&A, he says. Kaminsky is bullish on Suncor , despite its high valuation, because it is in good position for acquisitions.
Guy Adami also thinks Interoil Corp has strong momentum, and although it has run up over the past year, he thinks it may still have more room to the upside.
For the trader's full analysis, as well as Joe Terranova's take on what to expect from the upcoming OPEC meeting, check out the video!
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