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6 stocks to buy while the oil glut disappears

Optimism may be waning among most energy investors, but a pair of money managers believe the global oil supply glut could soon come to an end.

Eric Nuttall, portfolio manager at Sprott Asset Management and Bryden Teich, associate portfolio manager at Avenue Investment Management, say now is the time to buy Canadian energy names that have fallen out of favour.

“In my mind, this is the beginning of what is going to form a gigantic move on oil stocks,” said Nuttall in an interview with BNN.

He expects the current oversupply to be worked off by the end of 2016 as injections into storage facilities start to decline in April. Teich says he’s encouraged by supply from U.S. shale producers starting to come offline.

“U.S shale oil will come off about 800,000 barrels per day this year. You’ll see that supply kick down on their side,” Teich told BNN. “The first domino to fall was future projects in 2017, 2018, and 2019 that you’ve seen scrapped. That was the back half of last year.”

Both Nuttall and Teich are calling for an undersupplied environment as more distressed producers pull back production.

“Once we begin to draw oil from storage in the gigantic inventories we have in the U.S., that will be a signal to the market that the market is undersupplied because demand is exceeding current supply,” he said. “It will be a gigantic ‘go’ flashing sign for people to head into oil stocks.”

Their call comes despite the latest monthly report from OPEC Wednesday signaling the cartel will not blink in the face of global oversupply, even as lower prices hurt the budgets of member countries.

 

Eric Nuttall’s Top Energy Picks

Canadian Natural Resources (CNQ.TO)
Baytex Energy (BTE.TO)
Bonterra Energy (BNE.TO)
Cardinal Energy (CJ.TO)

Bryden Teich’s Top Energy Picks

Canadian Natural Resources (CNQ.TO)
Tourmaline Oil (TOU.TO)
Baytex bonds

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