A TITANIC SHIFT IN THE OIL MARKETS ARE UNDERWAY

This is a very important point I am about to make to you. WTI is surging, as predicted by the July seasonality stats. It’s amazing how trends keep repeating themselves. Anyway, the WTI-Brent spread is now under $3, which places the refiners, especially mid-continent refiners, directly into the ‘fag box.’

Look at the shares of ALJ, DK, HFC, WNR, PSX and CVI, all drowning in oil. The pendulum swings the other way and when it does, it cuts hard.

The refiners could be ‘epic’ buys here, if indeed the spread is set to widen again. After all, all of the experts believe that is will. I happen to think a ‘pain trade’ is taking place here, which will inevitably result in a flush out. This is not that.

I’ve been a shareholder of the WNR for many years, on and off, all the way down to $11 per share. The stock defies logic and reason on a regular basis. I do not think $27 is a bargain for the shares. I will look to get in under $20.

On the other hand, surging oil prices is good for a number of sectors, such as solar, alternative energy and good old fashioned exploration plays who bank coin off the price of oil going higher.

Top performers in the oil space, over the past two weeks, include: HNR, EGY, XCO, ROSE, GST, HK, KEG, HERO, WLL and CLR. But the space is entirely ignored by the investment community. There is a lot of potential upside to this industry, if the price of oil continues to trend higher.