Late Friday the energy complex landed center stage after news of a stock swap hit the Street.
According to published reports, Russia’s Rosneft will take a 5% stake in BP , and in exchange Rosneft will give BP about 9.5 percent of its shares.
Meanwhile, a source familiar with the matter told Reuters the planned deal would involve the two companies jointly exploring for oil and gas in Russia and other places.
What should you make of it? How should you trade?
Instant Insights with the Fast Money traders
Tim Seymour sees the move as more political than anything else. “It suggests to me that BP will look East and not West for oil. Having the Russian government on your side is how to do business in Russia.”
If you’re looking for a trade, Seymour thinks investors should sell the rip in BP." I don’t see any immediate benefit to the balance sheet from the deal,” he says.
Patty Edwards sees it a little differently. She says, “the deal makes BP slightly more attractive. With the economy starting to recover we’re going to need more energy.”
Karen Finerman would take a wait and see approach. “ I would not buy or sell on this news,” she admits.
Guy Adami thinks a better move might be watching the reaction of oil services stocks after Schlumberger reports in the week ahead. “I’d watch to see how the space reacts,” he says.
GOLD BREAKS DOWN
The traders are keeping a close eye on gold after the precious metal broke key technical levels and finished at a 7-week low.
Gold for January delivery lost $26.50, or 1.9%, to end at $1,360.40 an ounce. This is the lowest settlement price since Nov. 22.
What should you make of it?
Many of the reasons to own gold seem to be going away, says Guy Adami. I would not be a buyer of dips.
If gold can’t rally on a day like Friday when we see signs of inflation it gives me pause, says Tim Seymour. But I wouldn’t be a seller, either.
If gold slides to $1300, I’m a buyer, says Brian Kelly. In the months ahead, I think India will buy gold because of inflation and use it as a hedge.
Is gold a commodity or a currency alternative, adds Karen Finerman. That’s what you have to ask yourself.
Take a look at the sell off in the muni bond ETF.