Oil prices have been trading higher this week amid increasing concerns about both oversupply and weak demand. The Biden administration has failed to show the willingness to address the supply and demand problem, according to Virtus Investment Partners’ Joe Terranova.
“So with that in mind the price of oil is going higher,” Terranova said Wednesday on CNBC’s “Fast Money Halftime Report.”
In order to position for rising oil prices, Terranova bought shares of Pioneer Natural Resources Co (NYSE:PXD).
“If the price of oil is going higher, the name you want to own is Pioneer Natural Resources,” he said.
Only 22% of the company’s book is hedged against the price of oil for 2022, Terranova said: “So they’re going to significantly benefit from a rising-oil-price environment.”
He expects Pioneer Natural Resources to generate a lot of free cash flow as oil prices rise. Such will allow the company to strengthen its balance sheet and initiate a strong capital allocation strategy, Terranova said.
Pioneer Natural Resources is an independent oil and gas exploration and production company focused on the Permian Basin in Texas.
PXD Price Action: Pioneer Natural Resources has traded as high $196.64 and as low as $97.30 over a 52-week period.
The stock was up 1.18% at $190.27 at time of publication.
Photo: jp26jp from Pixabay.