I never try to predict prices of commodities - they are log normally distributed around a theoretical mean which today is in the $70 range for WTI. Canadian oil companies are nicely profitable at prices above CAD$60 a barrel and gas prices above $2.50 a gigajoule. If the price of oil fell to $70, these companies would be a better investment, not a worse one, since it would be possible to add shares at a lower price and benefit from the full-cycle price. Investment strategies need a long-term focus to succeed in my opinion.
Great post Michael. Always appreciate your analysis. Cheers
I never try to predict prices of commodities - they are log normally distributed around a theoretical mean which today is in the $70 range for WTI. Canadian oil companies are nicely profitable at prices above CAD$60 a barrel and gas prices above $2.50 a gigajoule. If the price of oil fell to $70, these companies would be a better investment, not a worse one, since it would be possible to add shares at a lower price and benefit from the full-cycle price. Investment strategies need a long-term focus to succeed in my opinion.