This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

[video] Dicker: Who Benefits From Higher Crude Prices?

NEW YORK (TheStreet) -- I was talking to Joe Deaux today about the very strong price of crude so far through 2014 and the beneficiaries of an oil price that will likely remain above $100 a barrel through the rest of the year.

Through much of the last half of 2013, many oil analysts thought that ramping production in the United States from oil shale plays in the Bakken, Eagle Ford and Permian basin plays would lead to an oil glut and a subsequent cratering of the price in 2014. So far this year, that hasn't happened.

I expect it's not going to. As I predicted last year, 2014 is going to see rising, high prices for crude oil, averaging well above $100 a barrel. Despite the increasing production here in the U.S., there is a profile of lower production from other traditional producing states in the Middle East and elsewhere which has contributed to global crude stockpiles being at their lowest levels since 2003.

That puts U.S. producers at a tremendous advantage to the rest of the world, able to take advantage of a rising barrel price while attempting ever increasing production targets. Energy has been a relative weak sector in the overall stock market, giving some terrific value to a few select U.S. exploration and production (E+P) companies.

Two favorites of mine in the Wolfcamp area of the Permian basin are Cimarex Energy (XEC) and Concho Resources (CXO), both reporting Wednesday. I expect both to miss on earnings (Cimarex is expected to earn $1.41 and Concho 96 cents), based upon bad West Texas storms in the last quarter, hindering production. But if both miss, that might allow for a temporary price adjustment, allowing an opportunity to buy both stocks. I would love to buy Cimarex around $104 and Concho around $110.

In addition to the Wolfcamp, another area to look at is the Bakken, with my favorite stocks being Continental (CLR) and Whiting (WLL) -- both of which will report on Feb. 26. Again, there is a good chance that estimates for earnings have been a bit overhyped and some misses can occur, delivering a nice opportunity to buy these shares as they come lower.

The long-term thesis is clear: Domestic oil producers will benefit from a continuing high price of crude oil where increasing production will be the key to higher valuations and stock prices. I talk more about this idea with Joe in the video above.

At the time of publication the author had no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Dan Dicker has been a floor trader at the New York Mercantile Exchange with more than 25 years of oil trading experience. He is a licensed commodities trade adviser.

Dan is currently President of MercBloc LLC, a wealth management firm and is the author of "Oil's Endless Bid," published in March of 2011 by John Wiley and Sons.

Dan Dicker has appeared as an energy analyst since 2002 with all the major financial news networks. He has lent his expertise in hundreds of live radio and television broadcasts on CNBC, Bloomberg US and UK and CNNfn.

Dan obtained a bachelor of arts degree from the State University of New York at Stony Brook in 1982.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $132.54 0.00%
FB $80.54 0.00%
GOOG $540.11 0.00%
TSLA $247.73 0.00%
YHOO $43.48 0.00%

Markets

DOW 18,232.02 -53.72 -0.29%
S&P 500 2,126.06 -4.76 -0.22%
NASDAQ 5,089.3620 -1.4320 -0.03%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs