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Boone Pickens - $120 oil Likely, $150 Is Too High Even for Opec’s Tastes – Is Now the Time to Sell Some Oil Stocks ?

February 25, 2011 | About:
CanadianValue

CanadianValue

209 followers
I can’t believe Boone Pickens is over 80 years old. He still does a nice job presenting myself on television again just like Buffett and Munger proving that doing what you love keeps your mind young.

Today Pickens was on CNBC talking about his natural gas plan for America and made the following comments about the oil market which we are all of course anxiously watching:

“Be careful counting on the Saudis…..they claim they can produce 12 million barrels a day, but they won’t let anyone audit their reserves…….so you are totally at the mercy of what they tell you they can do”

He went on to suggest that $120 oil could be in the fairly near future and that wouldn’t force OPEC (meaning the Saudis) to do anything about it. He thought that even Saudi Arabia would want no part of $150 oil given what it would do to oil demand.

Here is the link to the video of Pickens who is one of America’s oil gurus:

http://www.cnbc.com/id/41780773

As I watched Pickens talk about $120 oil it struck me as a little hard to believe that here we are coming out of the worst recession in 80 years and we are already back to $100 oil. Even with a weak economy we have triple digit oil prices.

Even though I have been writing regularly for gurufocus for almost a year about my intention to profit from higher oil prices $100 oil at this point frightens me a little bit. And I feel like I need to get my head around some answers to the following questions:

1. At what price does expensive oil create another recession ?

2. Do I try and reduce my oil exposure before the start of another recession ?

3. Or do I just ride a recession out in my oil stocks and wait for the next wave of escalating oil prices ?

4. Should I hedge my exposure to oil instead of selling my stocks outright ?

5. Will oil prices rebounding so quickly increase the likelihood that America embraces natural gas as a transportation fuel ?

6. At what point does the leadership in America realize that this oil issue is here to stay and commit to solving it by throwing money at alternative sources in a meaningful way ?

7. Should I start looking at alternative energy investments ?

I don’t have any clear answers to any of these questions at this point. I felt like being invested in the oil sector was a no-brainer over the past couple of years. I feel like I made some good stock selections, but I have to be honest as any idiot could have done well with this run for oil and the stock market.

Now I’m starting to wonder when I should look for the exit.

One stock I’m not close to selling is Petrobank. After spinning out Petrominerales which has almost doubled in the past few months the parent company is just as attractive as it was when I wrote this article:

http://www.gurufocus.com/news.php?id=109940

If anyone is interested in discussing Petrobank feel free to send me an e-mail swizzledxxx@gmail.com. I’ve learned a lot from investors who have contacted me over the past year.

About the author:

CanadianValue
http://valueinvestorcanada.blogspot.com/

Rating: 3.0/5 (8 votes)

Comments

highroic
Highroic - 3 years ago
During the last crash I made lots of money on CNQ that I sold close to the peak when oil was increasing while the market was crashing. Oil and CNQ were increasing well into the beginning of the crisis. I do not think there is any rush to sell just yet.
paulwitt
Paulwitt - 3 years ago
Is Now the Time to Sell Some Oil Stocks ?

I don't think so. I have my whole Roth IRA in the Vanguard Energy Fund and it is a long term hold. VGENX has a 10 year record of 15.39% annualized and beat the S&P by far. The long term charts for oil are up, up, and away, so I expect energy stocks to follow.

World Prime Source Energy by %

Oil 38%

Coal 26%

Natgas 24%

Nuclear 5.6%

Ethanol .2% *food prices going up, what's up with that?

Wind .2%

Solar .01%

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