speaking of happy talk; lifted from Barron's on NG:
" It used to be that crude oil and natural gas were joined at the hip. Increasingly of late,
though, they've been going their separate ways.
Crude has been heading south, breaking $28 a barrel and down eight bucks from its
peak before rallying a tad on Friday. Gas, on the other hand, has been for the most
part blazing hot and finished the week around $8.40 an mcf. Over the past year, oil is
up 70% or so and natural gas 270%.
The reason for the recent divergence, says Tom Petrie, is simple. Rather suddenly,
there's more oil around (as we somehow suspected there would be), and unless
OPEC cuts back by two million barrels a day early next year, the price will feel
further pressure and may even momentarily break $20 a barrel.
By contrast, he believes, gas won't get back into "a well-behaved range" for a good
long while. Specifically, until a pipeline is built from Prudhoe Bay, where there's a vast
store of the fuel, to Chicago, something that could take seven years.
Tom, who hangs his hat at Petrie Parkman and who, gosh knows, is no stranger to
these columns, has been pretty much on the money in calling the turns in oil ever since
it awoke from the dead (or, to put it more gently, when it was selling for $10-$11 a
barrel). He predicted the move into the 30s and then OPEC's boost in output that
would drive it down to the mid-20s. And he has been very keen on gas all the way
up.
He still sees a range for crude of between $23 and the low 30s but scoffs at the
notion it's headed back to the low-teens. Gas will have its occasional swoons, but
here too, the bias is to the upside.
One of the reasons for the tepid action in oil shares, Tom explains, is that institutions
have got it into their heads (or whatever) that when the stocks rise 30%-50% in a
year, it's time to sell them. That may have been true in the early 'Nineties, but it
doesn't hold water anymore.
In like vein, he reckons that natural-gas stocks are selling on the basis of $2.75-$3
gas, which is not only way below the current price but a heap below the likely price
for the foreseeable future. "
TMBR also broke out today and wondering if anyone else on the thread owns or has been following this, imo, sleeper's progress.
lazarre |
