Crude oil held under $70, a key psychological degree, on Tuesday.
The oil market bore the brunt of a main sell-off on Wall Street to start the week with the unfold of the Covid delta variant elevating fears of a slowdown within the financial restoration. OPEC and its allies over the weekend additionally reached a deal to spice up manufacturing.
In an interview with CNBC’s “Trading Nation,” Boris Schlossberg, managing director of FX technique at BK Asset Management, mentioned he’s lengthy vitality.
“Despite the volatility, I continue to like the sector, because I think this is just a hiccup,” he mentioned on Monday. “Oil is definitely going to stay pretty much at these levels, perhaps even rise a little further as the economy begins to improve.”
Schlossberg has his eyes set on Halliburton, which reported earnings earlier than Tuesday’s opening bell.
“That’s my favorite trade in the sector right now,” he mentioned, pointing to the corporate’s publicity to the North American market and the robust margins from its fracking enterprise.
Schlossberg additionally highlighted Halliburton’s enterprise into the cloud and synthetic intelligence, which permits the corporate to make use of much less capex and human capital to create income. He sees the inventory leaping to $30 a share inside 12 to 18 months.
“All of these margins are really going to start to rise as long as oil stays at around these levels, doesn’t dip below $60,” he added.
Shares within the oilfield companies firm jumped 5% on Tuesday after it reported earnings that beat road estimates by 3 cents a share. The firm additionally posted its second straight quarterly revenue.
Ari Wald, head of technical evaluation at Oppenheimer, is steering away from the group, although. He pitched a pairs commerce that would work to make the most of anymore draw back within the area — go lengthy the XME metals and mining ETF and brief the XLE energy sector ETF.
“You’re at these crosscurrents [for the XME] … We still like it long term,” he mentioned. “Energy just has a much poorer long-term structure.”
The XME ETF is up 20% this yr, whereas the XLE has risen 26%.