Cold Weather Could Heat Up Energy Space

All that said, I remain bullish for the longer term. Global crude supply is still challenged, and crude demand keeps growing with global economic activity, disproportionately so in developing regions such as China. The $55-to-$65 price range seems to provide the average band at which the market clears, providing enough incentive for production to satiate demand and to meet accelerating decline curves. The margin of error on the supply side is such that any hiccup would be meaningful to global markets.

The only issue that would really change my view on crude pricing is some global economic slowdown, a concern that looks less likely as the new year progresses.

In other words, all we need is a little winter. So let it snow, let it snow, let it snow.

Schlumberger Reports

Energy earnings are off to a brisk start with Schlumberger (SLB - commentary - Cramer's Take) reporting this morning, beating expectations by about 7 cents a share. Strength across the board, especially the company's seismic business, contributed to the good results.

Moreover, the oil-field giant is looking for a solid 2007. "While we remain of the opinion that there is no overall shortage of oil and gas reserves, the world is realizing that the period of cheap hydrocarbon energy has ended and new and higher sustained levels of investment are necessary to meet demand and guarantee future supplies," said Schlumberger CEO Andrew Gould. "We therefore expect to continue to see significant growth in 2007 particularly in the Eastern Hemisphere for exploration, development and production enhancement related services where technology is key to improving our customers' performance and reducing their technical risk."

Maybe the sky isn't really falling for energy-services stocks. With a little help from crude prices, this sector feels poised for a bounce.

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At time of publication, Edmonds had no positions in any of the stocks mentioned in this column, although holdings can change at any time.

Christopher S. Edmonds is partner and managing director of research at Pritchard Capital Partners, a New Orleans energy investment firm. He is based in Atlanta. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While Edmonds cannot provide investment advice or recommendations, he appreciates your feedback; click here to send him an email.