The energy sector is in the doldrums recently. Natural gas prices are at a multi-year low while BP has generally led the listed oil majors down a slippery slope. Nevertheless, some analysts feel that the energy sector is oversold and there are bargains for the picking.
Exxon Mobil (XOM) and Natural Gas (GAZ) are at trading bands last seen nearly 5 years ago. Also, United States Oil (USO) is trading at near historical lows.
Of the counters named above, you will probably need to pay more attention if you’re thinking of buying GAZ or USO. GAZ comes up as a “restricted trade” if you try to use POEMS to make a purchase (I’m not sure if the same problem crops up with other brokers), so a proxy you can use for GAZ will be the Chesapeake Energy Corporation (CHK) — incidentally a recent addition to the Temasek portfolio. As for USO, the ETF managers do not physically purchase and store crude oil, so they purchase Crude Oil Futures instead. While this works well in theory, USO has been pummelled recently by contango and the correlation between USO prices and crude oil prices have been drifting apart for some time. Just something for you to note.