Weekly Update: May 21, 2014

| May 21, 2014

Weekly Update: May 21, 2014

 

Big Picture Outlook:

This morning’s EIA oil inventory data has oil bulls breathing a big sigh of relief. The storage report for the week of May 16th revealed a whopping 7.2 million barrel draw.

In case you’re unaware, this is the first substantial drawdown US oil storage levels have seen in months.

Not surprisingly, WTI crude is popping on the news with gains of $1.54 per barrel.

Today’s inventory report is setting us up perfectly for another run higher in oil and gas stocks into summer. As you know, we have plenty of names in our option portfolio that will respond well with higher oil and natural gas prices!

Let’s get to those right now…

 

Portfolio Recap:

. . . . Encana (ECA) July 18, 2014 $19.00 Calls

ECA looks poised to break out of a month long consolidation that has kept it under wraps. Technical resistance is at $23.50 for this Canadian producer. If shares can break above that level with substantial volume, we could see another run higher!

Remember, both our profit target have triggered in this trade. Only aggressive investors should consider holding these calls for higher prices.

. . . . Abraxas Petroleum (AXAS) June 20, 2014 $2.50 Calls

After a hefty downturn last week, AXAS is bouncing back above $5.00 in today’s session.

Remember, our AXAS profit targets have already triggered. As a result, only aggressive investors should be holding a small portion of this trade for further gains.

. . . . Goodrich Petroleum (GDP) June 20, 2014 $17.50 Calls

GDP is acting like it wants to make another run at higher prices!

Shares of the oil and gas producer are inching beyond $25.00 in recent trading.

Remember, both our profit targets have already been hit and we’ve already collected massive gains in this trade. But there are some aggressive traders with a partial position who are still holding for higher prices.

If you’re one of them, just remember the BMO Capital Markets has a $35 price target on the name!

. . . . Spectra Energy (SE) September 19, 2014 $39 Calls

SE is breaking firmly above the $40 resistance level today!

As you know, we’ve been watching this technical level closely as it is a major bullish hurdle for this US natural gas pipeline operator.

With $40 in the rearview mirror, the odds are quickly growing that our $42 profit target is achievable. And since we have plenty of time with this trade, our $44 target is looking good as well!

Keep holding for further gains…

. . . . Cliffs Natural Resources (CLF) June 20, 2014 $17 Puts

CLF dropped to our second profit target at $16.00 in yesterday’s session!

The plunge sent our June $17 puts up to $1.61 per contract– a 78% gain. If you haven’t already, be sure to take some profits to the bank on this trade.

Since expiration is only a month away only aggressive traders should consider holding these puts for a further drop in CLF.

. . . . PDC Energy (PDCE) June 20, 2014 $70 Calls

PDCE is regaining the ground it lost last week. Shares of the oil and gas producer are back above $60 today. However, since our expiration is next month, we’ll need a quick move higher from PDCE to get our call options into a profitable position.

It’s important to note that JP Morgan Chase raised their PDCE price target to $81 a few days ago.

Aggressive traders should definitely consider holding onto these June $70 calls for a further rebound. Remember, our profit targets are at $70 and $73.

. . . . PetroQuest Energy (PQ) July 18, 2014 $6 Calls

After a hefty pullback last week, PQ is back on the move to higher prices. Shares ran back above $6 today as investors looked to crude oil’s hefty gains.

Remember, we have until July to see PQ make a sustained move to higher prices. Our profit targets are at $7.00 and $8.00.

Keep holding your PQ calls for higher prices!

. . . . Boardwalk Pipeline Partners (BWP) Sept. 19, 2014 $16 Calls

Here we go!

BWP is making a sizeable upside move. Shares are up nearly 6% in today’s session alone! Now that BWP has investors’ attention, we’ll likely see further upside in coming weeks.

Keep holding your BWP calls for higher prices. Remember, our profit targets are $20 and $24. The risk control line is at $13.90.

. . . . Petroleo Brasileiro (PBR) July 18, 2014 $16 Calls

Obviously, this trade is in the very early stages as it was just released yesterday. But PBR didn’t waste any time as it put in gains of nearly 2% in today’s session. Our profit targets are at $17.50 and $19.00.

Keep holding for further gains!

. . . . Cabot Oil & Gas (COG) July 18, 2014 $16 Calls

COG put in a textbook bullish reversal at the $36 support level today. Given the growing bullishness in the broad market and the price of natural gas, we have very good odds of COG being a successful trade in coming months. Remember, our profit targets are at $39.50 and $41.00.

Keep holding your COG calls for higher prices!

Until next time,

Justin Bennett

***Editor’s Note*** Remember, if you’d like to tell me how you’re doing in the service, or if you have any questions or concerns, please feel free to drop me a line at [email protected].

 

Category: Commodity Trading