Mid-Day -- Monday, June 13, 2022

Breaking news: some time ago I mentioned on the blog that I never paid attention to Libya. 

On the world stage, Libya is background noise. However, with loss of Russian oil, even if it's just a couple of million bbls, Libya can start to have an affect on global oil prices. And today, that may be what's going on now. After being as low at $118 or thereabouts, WTI is now back above $120 and trending toward $121. 

News? Libya oil fields, a million bopd, are apparently completely shut down. In addition, after an "early Covid scare in China, things seem to be back to what they were last week in China -- gradually re-opening as Covid becomes less of a concern.

Saudi Arabia: we should start hearing / reading stories that Saudi Arabia is increasing production. 

What you may not hear is that Saudi Arabia increases production about this time of the year every year: Saudi Arabia's domestic oil consumption surges in the summer as Saudi princes turn on the air conditioning, and the source of that electricity? Crude oil.

White House: it seems every tweet, soundbite, message from the White House is 180° from the previous tweet, soundbite, message on the same subject. Truly confused. The tea leaves suggest that Biden's Saudi trip will be a photo op disaster. Unless you like bone saws.

The grid:

• ERCOT (Texas): capacity 87K vs 68K demand; no problems for the grid today:
• ISO-NE: green at $70 / MWh
• ISO-NY: brown in Long Island, at $110

WTI: wow, I did not expect to see this -- back over $120, and now trading at $121.50.

Usual disclaimer.

Midstream: link to Alex Kimani, five midstream stocks with perfect exposure to soaring oil prices. I accumulate shares in two of the following five companies; and, am considering a third:

• Cenovus Energy, Canadian oil sands
• Ovintiv: previously "Canadian," has now "moved" to the US
• COP:
• PSX:
• Targa Resources:

For investors, from Barron's the other day:

The publication makes the case that energy stocks have more room to rise, especially for investors willing to mix it up with renewables-focused companies. 

Energy is noted to still be the cheapest sector in the S&P 500, trading at 9.8X expected earnings over the next year. Another positive identified is that balance sheets in the sector are healthier than they’ve been in years. 

Politics are also working in favor of energy stocks, with the reality of soaring gasoline prices increasing tolerance for traditional energy sources. Energy is also seen as due for a major investment cycle. Goldman Sachs noted that capital expenditure in oil and gas production has fallen 61% since peaking in 2014, and overall primary energy investment has dropped 35%. 

That means the three years could see a major rebound as producers ramp up supply to meet demand, and companies in sectors facing severe capacity constraints could see a boost. 

The six energy stocks that made the cut were EOG Resource (EOG), Enel (OTCPK:ENLAY), Phillips 66 (PSX), Sunrun (RUN), Shell plc (SHEL), Liberty Energy (LBRT).