It may be disappointing to financial market pundits, but oil futures prices have shown very little volatility of late. The CBOE’s measure of oil futures’ volatility--often called the oil VIX-- has fallen below 25, a level that has historically provided support.
It is difficult to see dark clouds on the horizon for crude prices, though, given the balance that exists between supply and demand in the global oil markets at the present time. This is a dynamic I have highlighted in myin recent months. The Energy Information Administration’s release of its Weekly Petroleum Status report this morning caused nary a gyration in energy prices, as the 7.0 million barrel build in U.S. crude oil inventories was offset by a 7.
So, the opportunity exists for savvy investors to play the fear that exists in the credit market of “volatile energy pricing” when, in fact, energy prices haven’t been volatile at all of late. The numbers back that up, as well. S&P’s High Yield Energy Corporate Bond Index has been a terrific performer of late, posting an 8.33% gain through the end of March and posting a three-year annualized performance of 13.48% to that date.
Picking individual bonds involves more work than picking individual stocks, as bonds have CUSIPs instead of ticker symbols and bond prices are not as widely quoted as stock prices. Finra’s market data, operated by Morningstar, is a terrific resource and I use it daily. Also, for investors who require investments to contain a ticker symbol and are also willing to slide one rung down on the corporate capital structure, many E&P companies have publicly traded preferred stocks as well as bonds.
The table below lists a few of my favorite names among E&P fixed-income securities. They should be part of your portfolio, too. My firm owns all securities listed.
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Source: CNBC - 🏆 12. / 72 Read more »