Post says drops by Baytex, others seen as overdone 2015-08-19 09:26 ET - In the News
See In the News (C-BTE) Baytex Energy Corp
The Financial Post reports in its Wednesday edition analysis shows the crude oil strip is a poor indicator of future prices. The Post's Jonathan Ratner, writing in Trading Desk, quotes TD analyst Juan Jarrah as saying the higher-than-average volatility associated with oil price movements indicates a wide range of outcomes may occur. In the 175 months since January, 2001, the futures strip overestimated the actual price 32 per cent of the time, and underestimated it the other 68 per cent. "Although WTI has recently shown to be highly correlated to the global supply/demand imbalance, this has historically not been the case," the analyst said in a note. "Clearly, there are other factors involved, but our conclusion is that the current weakness in oil prices is an overreaction if solely blamed on current excess supply." With market sentiment at a recent low, Mr. Jarrah looked for names that stand to benefit in a rising commodity price environment, specifically those with more than 20-per-cent liquidity on their bank credit lines, below-average cash margins, and at least a 70-per-cent weighting to oil. Among smaller producers, these include Baytex, Lightstream, BlackPearl, Surge, Twinn Butte and Zargon.