Stability continues in oil

Oil is hovering around $58 per barrel and our stocks mentioned in our last post, WLL and CLR are both up roughly 50%.    The strategy of writing covered calls still appears to be valid and we don’t expect another implosion in oil prices in the next few months as the summer driving season is around the corner.  We are steering clear of BEXP in the short term due to the large hedging losses of over $100 million that they reported today as well as share dilution with a public offering of 30 million shares.   The shares are going to be under pressure in the short term.    Goldman Sachs expects oil to drift to $45-50 per barrel in the short term and then reverse course and hit $65 in the medium term.    This is somewhat in line with my thinking as I expect oil to be rangebound between $50 and $70 for the remainder of this year.    We are seeing trends with some of the smaller players issuing stock to raise capital and I think that will probably continue and provide some downward pressure going forward.

NOG 10:17AM ET 5.91 Up 0.10 Up 1.72% 62,296 227,463
WLL 10:22AM ET 37.64 Down 0.74 Down 1.93% 243,728 1,601,390
SM 10:22AM ET 19.86 Down 0.01 Down 0.05% 64,633 1,315,190
EOG 10:22AM ET 70.35 Up 0.03 Up 0.04% 415,862 4,344,980
CLR 10:23AM ET 25.45 Down 0.42 Down 1.62% 247,788 1,359,710
MDU 10:22AM ET 16.84 Down 0.16 Down 0.94% 217,253 1,283,750
GEOI 10:18AM ET 7.57 Down 0.03 Down 0.39% 2,612 45,954.8
BSIC.OB May 13 0.79 0.00 0.00% 0 38,635.9
WSEG.OB 9:30AM ET 0.038 Up 0.001 Up 2.70% 17,000 55,187.1
KDKN.OB 9:43AM ET 0.225 0.00 0.00% 31,300 100,577
BEXP 10:22AM ET 2.87 Down 0.62 Down 17.77% 800,613 677,027
KOG 10:23AM ET 0.93 Down 0.15 Down 13.89% 1,031,881 1,195,120