I believe we are sleepwalking into a major rally… oil is undersupplied by at least 500,000 barrels per day.
Crude inventories are depleting and the decline curve (well depletion) never sleeps.
Meanwhile, oil companies haven’t been this cheap versus the WTI spot price in 25-30 years.
As for the macro, summer travel is upon us, $350 billion in tax cuts are on their way, the Fed is okay if inflation runs a bit higher than their target rate, all while unemployment is low.
Inflation is likely to run higher than the Fed’s target rate of 2%. They said they’re even okay with that. Of course, the government is fine with higher inflation. They need it to inflate their monstrous debt away.
This looks like opportunity to FMT Advisory.
With these tailwinds, we own or are buying more of what is likely the very best small oil and gas E & P in the entire shale.
Our target company could be liquated, and we’d get a likely double. As-is, we’re getting 6,800 acres in the Permian for free thanks to Mr. Irrational Market.
This $4 stock is vastly undervalued and headed far higher, in FMT Advisory’s estimation.
In the company’s most recent presentation, they believe the company’s value is $24. So never mind what we think – let’s not split hairs and just split the value in half: $4 per share to $12 per share would be 3x. We’ll detail the company at a later time after it’s hopefully made its big move so our clients get the most benefit!
In a nutshell, commodities are cheap, but useful commodity producers (like oil) are fundamentally set to soar. And what if inflation kicks in?
Forget about it; we’ll have enough gains in the sector to fill our tanks for years to come.