2nd Quarter Results

[dan_s]

2nd quarter results should be quite good for all of the companies in our three model portfolios. Comparisons to the 2nd quarter last year will be especially good for those with significant gas production. - Dan

During last week and this one, the price of West Texas Intermediate crude broke above a series of resistance levels – at $97.35 (U.S.), $97.80 and $98.24 per barrel – to complete a bullish triangle pattern. Crude oil also recently moved above its 20, 50 and 200-day moving averages and has started to outperform the S&P 500 and TSX Composite Index.

However, energy equities and related exchange-traded funds have yet to respond significantly to recent strength in crude oil prices. North American energy equities are trading significantly below recent highs and have been underperforming the S&P 500 and TSX Compositive indexes. Look for a favourable change as the sector moves deeper into its period of seasonal strength.

Energy equities should respond to strong quarterly earnings released in late July and August, thanks to higher energy prices. Last year, crude oil prices averaged only $87 per barrel in the second quarter. Natural gas prices have risen to nearly $3.75 per million British thermal units (MBtu), up from an average of $2.40 per MBtu in last year’s second quarter.

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