Oil prices are expected to overcome shorter-term obstacles in their rise to the triple digits during the next six to nine months, as surplus OPEC supply cannot keep up with global demand growing by 1.5 million barrels per year, says Amir Arif, Managing Director at Stifel, Nicolaus & Co., Inc.
“We are bullish as we look out 2012, 2013 and beyond, if the stocks are reflecting the good news in 2012 and beyond,” Arif said. “The problem is we might get some hiccups along the way before we get there. We are looking for oil to pull back towards the $85 to $90 range.”
Arif points to SandRidge Energy (SD) as one of his favorite oil plays with expected upside. He says SD is involved in the Mississipian Lime play in Oklahoma, an oil play which offers better economics than the Bakken shale or the Permian basin, and which is still not fully appreciated.
“It’s basically looking at names that we think have a lot of upside. In SandRidge‘s case, because they are onto a new emerging oil play that has not been factored into the stocks the way the Bakken or the Permian has been factored into some of the names out there.”