Ideas
Long oil into May, $85 target.
Paul turned bullish on oil for 2025 because new US sanctions on Russian producers and shadow-fleet insurers, cold winter demand, disrupted Iranian supply, and Saudi restraint are tightening a market that had been softening. He expects a squeeze into driving season, with a price target of $85 by May, then neutral-to-negative from June as Saudi and OPEC spare capacity returns. Demand growth of 0.5-1 mb/d and possible China stimulus help, while Trump tariffs are a risk.
Exxon strong growth and good shape.
Paul says Exxon is in really good shape. It reaffirmed strong growth through 2030 due to its advantaged new Permian position from buying Pioneer and its phenomenal Guyana assets, and it is taking Saudi market share. He views it as a stronger major than European peers.
Negative broader market on tariff risks.
Paul is negative on the broader US equity market because tariff and trade-war risk is inflationary and disruptive, tax and deficit concerns are building, and Trump policy pinball tape bombs create fear. He explicitly says he is pretty negative on the market but bullish oil within that construct.
Midstream moving business looks excellent.
Paul likes the midstream sector because the business of moving oil and gas around the US is excellent and midstream names have performed well; he says midstream guys all look good.
Natural gas-to-AI theme remains mega.
Paul calls natural gas-to-AI a mega theme he plans to keep riding. AI and data-center electricity demand benefits natural gas and related power/infrastructure names; he has been big in Constellation Energy and Vistra, which continue to do well, and likes Kinder Morgan on the theme.
Refining tightens; likes DK, PBF.
Paul is positive on refining after a recent conference showed conditions better than the bearish 2024 mood. Planned refinery shutdowns at Lyondell in Houston and later at PSX/Los Angeles should tighten the market, and decent demand plus more Saudi barrels should help levered refiners. He specifically likes DK and PBF.
Baker Hughes as stealth AI play.
Paul does not like oil services broadly but makes an exception for Baker Hughes, which he sees as a stealth AI play because of its turbine business; he likes turbines and says he likes Baker Hughes.
Avoid oil services except Baker Hughes.
Paul says he does not really like oil services apart from Baker Hughes and is less interested in the other large service names as Schlumberger reports soon. He gives limited specific reasoning for the group dislike, but the stance is a clear avoid excluding his Baker Hughes exception.
Chevron fine on Hess decision.
Paul expects Chevron to do fine because it should get a good decision from Exxon over the Hess dispute this year. He also notes Chevron cut capex and is plateauing in the Permian, which supports oil-market discipline.
High-beta beaten-down oil equities for oil bulls.
For aggressive investors who want to express a correct bullish oil call, Paul points to heavily beaten-down, levered oil equities. BP is very levered despite poor management and strategy, and Devon is a beaten-down large oil name; he warns these will be very wrong if the oil call is wrong.
This The David Lin Report video, published January 19, 2025,
features Paul Sankey
discussing WTI, XOM, SPY, AMLP, CEG, VST, KMI, CRAK, DK, PBF, BKR, OIH, CVX, BP, DVN.
10 trade ideas extracted by AI with direction and confidence scoring.
Speakers:
Paul Sankey
· Tickers:
WTI,
XOM,
SPY,
AMLP,
CEG,
VST,
KMI,
CRAK,
DK,
PBF,
BKR,
OIH,
CVX,
BP,
DVN
