Oil producers · Oil & gas producer equities (E&P)

This is how G&R actually owns the view: "I'm not a physical or paper commodity trader. I trade the equities." An E&P — exploration and production — company is simply a business that drills wells and sells the oil, so its shares are a leveraged way to own the barrel without touching futures.

The appeal is that these shares never went up. Through six months of the worst physical supply disruption in decades, "the oil stocks didn't do very much" and "remain out of favour," because investors decided early that the crisis was a false alarm and never changed their minds. Meanwhile the industry is spending roughly $550 billion a year when, on his math, it needs about $1.5 trillion a year for a decade just to rebuild what's depleting.

The catch is that the companies themselves are part of the problem. Because the market values a producer at about half what its oil in the ground is worth, spending cash to find more oil destroys value on paper, while buying back its own cheap shares creates it — so managements hold production flat and buy back stock. That keeps supply tight, which is bad for consumers and good for anyone who already owns the shares.