ENERGY Sector : Much like NYMEX Crude Futures, buy on the dip…and on the breakout

The SET ENERG sector posted its a time high back in the crazy days of 2007, 3 months after NYMEX crude peaked. A retest of these all time highs is in store, and much like NYMEX crude futures now, we are buyers on the dip, and ready to trade breakouts as well.

We think there is a solid chance NYMEX will pop US$ 100 again in the near term, and view an advance before the summer is out to 108-110 with a probability of 70%.

For the sector, a double top can’t be ruled out, but it would not take much in terms of additional global chaos (like a resurgence of issues in Bahrain) to force crude much higher and with it the Thai energy sector to 26,500-27,000 from the current 22,835

The Saudis may want oil at circa US$ 80 a barrel, but the YTD average for NYMEX is 98 or so.  And who would like to see oil at 120? Yes, you guessed right, the Iranians.

One data point to keep in mind is USA Q2 GDP this week. What if…it comes in a tad higher than expectations? Say 2% or slightly higher, not the 1.5-1.6% consensus. Oil will go straight through the ton. Should also spark a rather solid bounce in the beleagured USD as well, much to the relief of the BoT and indeed many a central bank in the emerging world. A bad print, 1.5 or lower and gold will probably hit 1650, the Baht may strengthen to 29.5 against the dollar, and oil will come off to 95, possibly 92 again.

 

 

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