(Article by Becca Lipman. List compiled by Eben Esterhuizen, CFA. Data sourced from Yahoo! Finance.)
Has all the bad news already been priced into oil? Is there reasonable chance of a rebound in oil stocks in the near future? According to CNBC, it’s possible.
"Oil prices languished near three-week lows on Tuesday, as worries about Europe's debt crisis fueled fears about the demand outlook for oil. But one analyst believes oil prices are headed higher, with markets already pricing in the worst case for the global economy."
While it is best to "never say never," there doesn't appear to be much more bad news that can be priced in. The global financial crisis, European debt, and unrest in Libya have all been accounted for. And after the fall of Moammar Gadhafi’s regime some predict Libya will be producing at pre-war levels within 15 months.
John Licata, Chief Commodity Strategist at U.S.-based research consultancy Blue Phoenix reported to CNBC, “We've been talking about Greece defaulting for so long, I feel like this is just another opportunity to knock the price of crude oil down, and I think that right now, if anything, any dip should be bought.”
Assuming Licata is right and the point of capitulation is underway, we were wondering: which oil stocks are expected to see a significant rebound over the coming weeks?
For ideas we collected short sellers data, and identified a list of oil stocks that have seen a significant decrease in shares shorted over the last month.
In other words, short sellers seem to think the upside potential of these stocks outweigh the downsides (that's why they are closing their short positions, i.e. scaling back on bearish bets).
Use this list as a starting point for your own analysis.
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1. Ultra Petroleum Corp. (UPL): Engages in the acquisition, exploration, development, production, and operation of oil and natural gas properties in the United States. Shares shorted have decreased from 10.03M to 6.32M over the last month, a decrease which represents about 2.48% of the company's float of 149.56M shares.
2. Comstock Resources Inc. (CRK): Engages in the acquisition, development, production, and exploration of oil and natural gas properties in the United States. Shares shorted have decreased from 9.25M to 8.74M over the last month, a decrease which represents about 1.14% of the company's float of 44.65M shares.
3. Lone Pine Resources Inc. Common (LPR): Engages in the exploration, development, and production of oil and gas properties in Alberta, British Columbia, Quebec, and the Northwest Territories of Canada. Shares shorted have decreased from 1.23M to 478.14K over the last month, a decrease which represents about 5.02% of the company's float of 14.99M shares.
4. GMX Resources Inc. (GMXR): Operates as an independent oil and natural gas exploration and production company primarily in the United States. Shares shorted have decreased from 7.29M to 6.11M over the last month, a decrease which represents about 2.24% of the company's float of 52.69M shares.
5. CAMAC Energy Inc. (CAK): Engages in the exploration and production of oil and gas. Shares shorted have decreased from 4.68M to 4.06M over the last month, a decrease which represents about 1.07% of the company's float of 58.09M shares.