Oil's Setback Creates Buying Opportunities

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Growth manager and energy specialist Greg Bay, president of Vancouver-based Cypress Capital Corp., used the recent major sell-off in the Canadian energy sector in the wake of the steep decline in the oil price to add to select holdings that he considered had fallen too sharply and offered compelling value.

Growth manager and energy specialist Greg Bay, president of Vancouver-based Cypress Capital Corp., used the recent major sell-off in the Canadian energy sector in the wake of the steep decline in the oil price to add to select holdings that he considered had fallen too sharply and offered compelling value.

Many of the stocks that were pummeled have staged a good recovery on investor confidence that the oil price has become more stable and unlikely to drop to US$75-US$80 a barrel as was initially feared. "But there are still opportunities for selective investment," Bay says.

At current levels of both oil and gas prices, many producers will, he says, still enjoy excellent cash flows and the weaker Canadian dollar versus the U. S. dollar will help Canadian energy producers.

A seasoned oil patch pundit, Bay considers that the oil price will range from US$110 to US$120 per barrel into next year.

He feels the natural gas price could weaken somewhat, trading between US$8 and US$9 per MCF. "There are headwinds associated with this commodity on the supply side."

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