Skip to content

Enterprise Products (EPD) Stock Price Is Up 25.8% YTD. The Bear Case.

Simon Mugo trader
Updated 13 Jun 2022

Trade EPD stock Your capital is at risk

Key points:

  • The enterprise products (EPD) stock price has risen by 25.8% in 2022.
  • While everyone is bullish on EPD stock, I would like to explore the bear case.
  • Could we be about to witness peak oil demand and prices?
  • Read on to find out.

The Enterprise Products Partners L.P. (NYSE: EPD) stock price has risen by 25.8% in 2022. Many analysts expect the company’s share price to keep rising as global crude oil prices remain elevated amid high demand and low supply.

It is easy to make a bullish case for a stock in an industry that is roaring higher. However, I would like to explore a contrarian idea that we could be closer to a peak in oil demand and prices, which could lead to a decline in the prices of oil companies as demand weakens due to various factors.

Also read: Oil Trading Guide – How To Trade Oil.

First, let us briefly explore the bullish case for oil prices. Currently, the global supply of crude oil has witnessed significant disruption after Western countries imposed sanctions on Russian oil exports, plunging the global markets into a crisis given that Russia is a leading oil producer.

Since the war between Russia and Ukraine began, oil prices have steadily climbed amid a significant supply gap. However, recent events point to a possible cooling of oil prices amid a clump in consumer demand as inflation eats into most people’s disposable income.

Many retailers are now forecasting lower sales as consumers tighten their spending habits to cater for higher fuel costs, which have triggered a significant increase in living costs as the prices of essential goods such as food items skyrocket.

The lower demand from consumers is likely to spread to manufacturers, who are likely to cut their production in response to lower demand. This scenario makes me think we could be close to peak oil demand and prices.

Furthermore, looking at the West Texas Intermediate (WTI) price chart, we can see that since peaking in early March and retracing a significant portion of their gains, oil prices have been inching slowly higher. The momentum behind the latest rally is not as strong as the rally that started in December up to early March.

Based on this assumption, I am more inclined to believe that there will be minimal gains in oil prices over the coming weeks. Hence, we could see EPD stock stagnate and trade sideways as the midstream oil company’s operations flatline.

*This is not investment advice. Always do your due diligence before making investment decisions.

EPD stock price.

Enterprise Products (EPD) stock price 13-06-2022
Source: Tradingview

EPD stock price has risen by 25.77% in 2022 and recently pulled back. Could the shares fall further?

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading