For energy stocks, the next few months may be difficult.
OPEC+ delayed negotiations indefinitely after failing to reach an agreement on oil production on Monday. Oil prices have been under pressure. After reaching a six-year high, they fell more than 2% on Tuesday.
Another type of macroeconomic force may “indicate some vulnerabilities in short-term trading,” Oppenheimer’s head of technical analysis, Ali Wald, told CNBC’s “trading country” on Tuesday.
“Specifically, we are focusing on the U.S. dollar,” said Wald, whose company focuses on the energy industry market.
He pointed out that when the energy sector peaked in early June, the dollar was not so strong.
“This kind of dollar strength has relaxed and put downward pressure on inflation expectations,” Wald said. “This puts pressure on value-related inflation transactions, such as energy, which in turn gives investors the green light to reinvest in growth stocks.”
“For now, the strengthening of the US dollar is causing this short-term disruption, but” Supports this view that more moderate price pressure should help extend the longer-term equity cycle, so we believe the energy has more medium-term lows in that period, “he said.
Another trader believes that energy trading has more scope for short-term gains.
New Street Consulting Group founder and CEO Delano Saporu (Delano Saporu) stated in the same “trading country” that recent buyers and current holders of oil and oil-related investments “may wish to maintain these positions in the short term”, and overall production remains at the current level.
“In short term, you have some room to run here, “he said.
In the long run, Saporu stated that he expects consumption to fall, especially in the United States, the world’s largest oil consumer.
“From a long-term portfolio perspective, as we enter different areas and alternative uses, you may want to cut some long-term positions,” he said.