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It's hitting a fourteen month high today reaching hundreds Xbox per barrel after the Energy Department said crude inventories fell.
More than expected last week so the question is will the price continued to rise.
In the second half of this year and what names will benefit joining.
-- now for his second half setup as Michael Peterson managing director of energy research for -- LB and company and at first of all I'd love your opinion on what happened today.
Oil hit its highs of the session just after the Fed minutes were released is there a correlation between anything that was -- and there is -- simply.
The EIA numbers we got today.
-- it's a pleasure to -- you.
I would say there -- a couple of things going on with oil very little that corresponding at least longer term with what happened with the Fed.
I think we're looking at on the -- side of things.
A response to what's happening -- -- political unrest in Egypt.
And I think in domestically the WTI price rise has a lot to do with refineries returning to.
Utilization and higher demand to demand now for refining.
Is as -- -- it's been since 2007 -- I think that explains the recent surge in interest things Michael where do we go from here have you see this playing out I mean.
You know 106 bucks a barrel less -- -- gonna work its way down to the consumer.
How long do you expect these high prices to -- did they do.
You know actually in a word I would say balance of the year would be range bound.
It may surprise your viewers to hear that.
Despite the run up that we've seen recently in crude.
And -- -- the volatility was in on the -- -- for natural gas longer term our model suggests that we're going to see range bound to a slight bias to the downside with regard to what commodity prices for year -- so.
Some of those prices may not for a long period of time filter to the end user.
OK now let's get to your picks because that that's what our viewers are dying to know.
You just said that -- be range bound but does that mean that the stocks that are invested in some of these areas of energy -- founded and which ones -- have the ability to hit it out of the ballpark.
Well listen some may be range bound commodity producers that will.
Increase earnings based on higher commodity prices.
Are not likely to benefit for the rest of the year.
We're going to look to stocks that will benefit either from higher volumes or greater efficiency -- -- like which -- -- -- it like master limited partnerships -- tend to have very nice dividend yields but I presume that's not the only driver.
Behind your choices.
Know that that -- the dividend yield is certainly attractive in today's market but they're also very tax efficient if it's the same.
Energy business just wrapped in a tax efficient rapper if you will so in terms of the names that we that we would highlight.
Is a very attractive name this is the second iteration of of -- the first version was sold off to.
Chevron a couple of years ago the very experienced management team they're going to deliver.
Probably 30% growth in terms of -- distribution rising yield between now and the end of 2014 and for perspective the company came out.
First quarter of twelve and has grown the distribution 30% since -- so have really very solid track record.
To continue this growth -- -- -- -- danced down what 21% zero -- that doesn't worry.
Well the date they are down if you are buying into a master limited partnership.
You become as the name suggests a partner in oil and gas development.
And you're buying in primarily because of the yields and so while the prices have changed in less you've -- acted.
You have benefited from the distribution not a change in price.
Let me just get a quick quiet all of a legacy reserves active legacy reserves -- -- -- -- white what is it helped that name that you really like right now.
Well legacy as a long standing operator in the Permian Basin as you've heard from other guests and commentators the permit is a very attractive place to operate.
Legacy has built a business out of rolling up small mom and pop operators into.
A vast production base because of that if you -- look at the map of the Permian Basin it looks like a scatter shot across west Texas.
The reason that that's important speaks to our view of how you make money in the second half of the year mainly.
Economies of scale legacy has a terrific opportunity to aggregate new fields capture economies of scale.
The last point I would mention in terms of legacies position in the Permian.
Because they have operating level data and their bids are going to be much more accurate then estimates when they go into the bidding -- Great information Michael Peterson thank you so much for joining us.
That's my pleasure to join it thank you great to have you Michael so he picks.
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