Bin Laden: What does his death mean for oil prices?

[dan_s]

The market seems to be trapped in a debate over the sustainability of current crude prices.

The death of Bin Laden has Bulls and Bears confused as to what it means for the direction of commodity prices. My take is that it means nothing compared to the fundamentals. As I write this, the 12-month strip is firmly holding $114/bbl. Brent Blend, a better indication of world oil prices, is currently trading at over $127/bbl. Louisiana Sweet is currently trading at $127.40/bbl. The direction of the U.S. dollar and world demand for more and more liquid fuels have a lot more to do with oil prices than the death of one criminal.

For someone just getting into the Sweet-16, my advice is to build a strong foundation with our large-cap growth stocks. Cimarex Energy (XEC), Continental Resources (CLR), Denbury Resources (DNR) and Plains E&P (PXP) all look like Strong Buys at current prices to me. I believe that all four will be seeing earnings forecasts increased after they release first quarter results and operations updates this week.

I took a hard look at Carrizo Oil & Gas (CRZO) over the weekend. It appears to have stunning earnings growth locked in for the next two years. Gran Tierra (GTE) and Petrominerales (PMGLF) have incredible upside as both are going to report strong production and reserve growth this year.

I’m expecting Mitcham Industries (MIND) to run up to $20/share as we approach their fiscal first quarter results.

All of the Sweet-16 are now trading below my Fair Value estimates. My Fair Value estimates are listed in a table at the front of the “Sweet 16 Detailed Update” that can be accessed by Premium Members under the Sweet 16 tab.

From our Watch List:
 BBG, BRY, COG, EOG, FST look like solid “Core Holdings”
 I like all of the onshore drillers with Sweet 16 member PTEN my favorite
 Read our company profile on MHR
 We are working up profiles and forecasts for EXXI and HNR.