Oil Markets Update: Iran Nuclear Scientist Killed, Oil Shipments Threatened

Yet another round of political drama has been injected into the oil industry -- how will prices be affected?

Iran's state media reports a native nuclear scientist was killed in a Tehran bomb blast. It is described as a third assassination targeting the nation's atomic program that the U.S. and Israel have vowed to halt, says Bloomberg.

The target was Mostafa Ahmadi Roshan, a director at the Natanz uranium enrichment facility in Isfahan province.

"Tehran Deputy-Governor Safar-Ali Bratlou told the state-run agency that a magnetic device was placed under Roshan's car by a person on a motorcycle. He said the method was similar to previous attacks on Iranian nuclear scientists and blamed Israel for the killing."

Oil prices
Iranian officials have already threatened to shut the Strait of Hormuz, an important transit route at the mouth of the Persian Gulf for about a fifth of the world's oil.

If the strait were to close it would cut off significant oil supplies and force shippers to take longer routes, causing prices to rise. "It also potentially opens the door for a military confrontation that would further rattle global oil markets," adds the Associated Press.

Iran would be able to close off the straight with relative ease. With tensions already high, the assassination of its nuclear scientist makes the threat even more probable than before.

Fuel supplies climbed in January, causing a decline in U.S. crude and fuel prices. Wednesday's attack, and the correlating threats to oil supply, could potentially bring prices back up. 

Business section: Investing ideas
Any conflict with Iran has the potential to move oil prices significantly higher.

So we were wondering, which oil companies have been boosted by bullish sentiment?

To create this list, we started with a universe of about 190 oil companies.

To refine the list, we collected data on institutional transactions, and identified the names that have seen significant inflows during the current quarter.

And to further refine the list, we collected data on short-seller trends and identified the names that have seen a significant decrease in shares shorted during the current month (i.e., short-sellers think the upside of these stocks outweighs the downside).

Sophisticated investors, like hedge fund managers and short-sellers, think these oil stocks are going higher -- do you agree?

List sorted by market cap. (Click here to access free, interactive tools to analyze these ideas.)

1. Dril-Quip (NYSE: DRQ  ) : Designs, manufactures, fabricates, inspects, assembles, tests, and markets engineered offshore drilling and production equipment for use in deepwater, harsh environment, and severe service applications worldwide. Net institutional purchases in the current quarter at 1.9M shares, which represents about 5.51% of the company's float of 34.49M shares. Shares shorted have decreased from 3.69M to 2.61M over the last month, a decrease which represents about 3.13% of the company's float of 34.49M shares.

2. EXCO Resources (NYSE: XCO  ) : Engages in the exploration, exploitation, development, and production of onshore North American oil and natural gas properties with a focus on shale resource plays. Net institutional purchases in the current quarter at 12.5M shares, which represents about 7.31% of the company's float of 171.01M shares. Shares shorted have decreased from 17.27M to 12.53M over the last month, a decrease which represents about 2.77% of the company's float of 171.01M shares.

3. Forest Oil (NYSE: FST  ) : Engages in the acquisition, exploration, development, and production of oil, natural gas, and natural gas liquids primarily in North America. Net institutional purchases in the current quarter at 5.8M shares, which represents about 5.86% of the company's float of 98.98M shares. Shares shorted have decreased from 12.85M to 11.81M over the last month, a decrease which represents about 1.05% of the company's float of 98.98M shares.

4. Quicksilver Resources (NYSE: KWK  ) : Engages in the exploration, development, and production of unconventional natural gas onshore in North America. Net institutional purchases in the current quarter at 13.3M shares, which represents about 14.62% of the company's float of 90.95M shares. Shares shorted have decreased from 27.84M to 21.58M over the last month, a decrease which represents about 6.88% of the company's float of 90.95M shares.

5. Approach Resources: Engages in the acquisition, exploration, development, and production of oil and gas properties in the United States. Net institutional purchases in the current quarter at 3.3M shares, which represents about 13.24% of the company's float of 24.92M shares. Shares shorted have decreased from 5.59M to 5.28M over the last month, a decrease which represents about 1.24% of the company's float of 24.92M shares.

6. GeoResources (Nasdaq: GEOI  ) : Engages in the acquisition, reengineering, development, and exploration of oil and gas reserves in the Southwest, Gulf Coast, and the Williston Basin areas of the United States. Net institutional purchases in the current quarter at 899.1K shares, which represents about 4.53% of the company's float of 19.83M shares. Shares shorted have decreased from 3.36M to 2.96M over the last month, a decrease which represents about 2.02% of the company's float of 19.83M shares.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.


List compiled by Eben Esterhuizen, CFA. Kapitall's Eben Esterhuizen and Rebecca Lipman do not own any of the shares mentioned above. Institutional data sourced from Fidelity. Short data sourced from Yahoo! Finance.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 12, 2012, at 8:28 PM, rsinj wrote:

    "Sophisticated investors, like hedge fund managers and short-sellers, think these oil stocks are going higher -- do you agree?"

    Since XCO is hitting new 52 week lows daily, obviously "Sophisticated investors" have been very wrong thus far.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1757310, ~/Articles/ArticleHandler.aspx, 10/25/2014 5:06:16 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement