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According to the EIA, there are 5,496 drilled but uncompleted wells in the U.S. right now, which is a three-year high. In the last month, there were 125 more wells drilled than opened.
The takeaway here is that the oil inventory overhang isn’t going away, and industry stocks that have been rallying while energy prices fell are probably overvalued in the short term. We like this position on Cabot Oil & Gas Corporation (NYSE:COG) as a way to profit from this “reversion” back to support. We expect investors will start pricing this in before we get too much closer to the end of the quarter and earnings season.
‘Buy to open’ the COG July 22 Puts (COG170721P00022000) for a maximum price of $0.65.
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