It's an admittedly overworked adage, especially in investing, but what goes up really does eventually come down. I expect that maxim to play out in spades for the integrated energy companies and refiners during the coming earnings season.
It's also the message from ConocoPhillips
I expect Conoco to be one of many big integrated companies to reflect such trends. Beyond that, with refinery margins down nearly 50% in the quarter, such major refiners as Tesoro
You probably recall that the second quarter saw expanded refining margins boost Big Oil's downstream profits, largely saving the day amid slightly lower year-over-year crude prices. That obviously won't happen in the third quarter. Despite crude prices now approaching $80 a barrel, firms like ExxonMobil
What does all this mean for investments in the energy group, whose earnings season will kick off on Oct. 19 with oilfield services leader Schlumberger
I remain convinced that we're at or near the point where global crude oil demand will begin to outstrip supply, a gap that's likely to widen substantially as time marches on. You should be investing for that trend. It also makes me advise my Foolish friends that, especially with crude prices near record nominal levels, the producers mentioned above will become even more attractive on any sort of price pullback.
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