If you needed a better invitation to get long oil stocks for the next two years, the naming of Exxon Mobil (XOM) CEO Rex Tillerson as Secretary of State couldn’t be more obvious. There are some clear themes floating through the nascent Trump administration, set to take office in January and one thing is becoming stunningly clear:
Oil and gas are going to be the driving theme of this new Government.
The pieces to this puzzle are coming together very quickly and it starts with a steady connection of Russia to the incoming President and his as yet-to-be confirmed cabinet.
It continues with the Trump refusal to take CIA or other national security intelligence concerning Russia’s influence on the National election, and his refusal to accept their recent findings on Russian meddling.
The Russian influence is important here – they are by far the largest non-OPEC nation who are dependent upon oil revenue for survival and international influence – the other arguably being the United States.
Now, look at the names that dominate the incoming cabinet. There are two themes here of the next President in the men he is choosing: There are Generals and other military thinkers, and there are men with strong ties to oil. There’s Wilbur Ross, incoming Commerce Secretary, the hedgefunder with a majority share in EXCO Resources (XCO), a major natural gas company, and other oil interests. There’s Harold Hamm, the Continental (CLR) CEO who until recently was the Trump…
If you needed a better invitation to get long oil stocks for the next two years, the naming of Exxon Mobil (XOM) CEO Rex Tillerson as Secretary of State couldn’t be more obvious. There are some clear themes floating through the nascent Trump administration, set to take office in January and one thing is becoming stunningly clear:
Oil and gas are going to be the driving theme of this new Government.
The pieces to this puzzle are coming together very quickly and it starts with a steady connection of Russia to the incoming President and his as yet-to-be confirmed cabinet.
It continues with the Trump refusal to take CIA or other national security intelligence concerning Russia’s influence on the National election, and his refusal to accept their recent findings on Russian meddling.
The Russian influence is important here – they are by far the largest non-OPEC nation who are dependent upon oil revenue for survival and international influence – the other arguably being the United States.
Now, look at the names that dominate the incoming cabinet. There are two themes here of the next President in the men he is choosing: There are Generals and other military thinkers, and there are men with strong ties to oil. There’s Wilbur Ross, incoming Commerce Secretary, the hedgefunder with a majority share in EXCO Resources (XCO), a major natural gas company, and other oil interests. There’s Harold Hamm, the Continental (CLR) CEO who until recently was the Trump pick for Energy Secretary, before being quashed as perhaps being ‘too’ cozy with oil to run Energy, or because Hamm ultimately was more interested in running Continental, but in any case he remains a loyalist and Trump confidante. There’s Scott Pruitt, the AG of an oil and gas intensive Oklahoma, ready to assume command of EPA.
All of these men are not coincidentally climate change ‘dissenters’.
There were words on the Trump campaign trail of a slashing of drilling regulation, an ‘unleashing of U.S. energy potential’, a restart of the Keystone Pipeline and several quotes from the President-Elect bemoaning that the US didn’t “take the oil” while still in Iraq.
And just last weekend, we got a first-time commitment from the Russians to participate in the newly crafted OPEC production agreement, throwing in a small but significant 300,000 barrels a day, pushing oil prices back above $52 a barrel.
Is it coincidence that the CEO of Exxon, who won the Russian Medal of Friendship, is Trump’s latest idea for Secretary of State?
I hardly think so.
Whether or not he is ultimately picked or confirmed, the signs are just too telling to ignore.
Oil stocks are going to do very, very well in a Trump administration. And you need to be buying them, today, when oil is taking a break from its big, OPEC and Russian inspired move.
Go to the ones you can count on – the ones we’ve been accumulating and use every dip in the oil market as an opportunity. Ignore the noise of the U.S. ‘turning open the taps’ on shale again as prices rise – their ability to do that is being greatly overrated, as is their new lack of discipline, learned after more than two years of disaster pricing.
I give you my favorites to circle back on, the ones that have done nothing but make us money: Cimarex Energy (XEC), Hess (HES), Anadarko (APC) – these will be long-term monster winners in a new Trump administration. Buy them and forget about them.
