Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: Gary Burton who wrote (50018)	8/29/1999 1:23:00 PM
From: SliderOnTheBlack	Read Replies (1) of 95453

RE: Pricebands - " it will likely cap the upward momentum of osx and ep stocks" .... but, not the domestic Nat Gas pureplays ! - with the fundamentals so strong for domestic Nat Gas (especially the Eastern Seaboard market - ie: RRC !) why even bother worrying about what OPEC does, or doesn't do - or, the markets reaction to it, or what Big Oil does Cap Ex spendingwise in relation to its view of the sustainability of crude prices here ! Simply - GO GAS ! Personally; I think that if OPEC holds the cuts untill April that we will see a crude shortage and a substantial speculative bubble in crude prices - allthough it will be short lived; perhaps just 1 quarter; as OPEC will ''then'' quickly expand production to protect market share etc... I think the analysts have BOTH over-estimated supply AND under-estimated demand and we ''could'' see a historic situation play out in both Crude & Natural Gas this winter... Quite simply OPEC has cornered themselves into creating a speculative bubble in crude - as they know they can NOT - now raise production; the Market would severely penalize them and they know this ! They have been backed into a corner of maintaining production levels that they also know will create pricing to a level to stimulate Global production - but; what is the lessor of the two evils for them ? Higher prices - prompting competitive production & potentially them losing some market share - ''down the road'' later.... OR, absolutely losing all credibility with the market and see prices fall quickly in trying to stabilize crude prices into a ''banded level'' ? ... this is a no-brainer ! They HAVE to stick with the cuts - and they WILL create a shortage and Crude will reach a speculative bubble level for a short period of time - somewhere in the next 3 quarters.... Bottomline; this will be a huge windfall to the Oil Majors and the Independant E&P companies. I do not think that they will increase Cap Ex spending to the levels that many here think... I think this will however be a historic 3-4 month windfall of revenue for the E&P's who will be able to dramatically repair balance sheets and flow massive amounts of cash to the bottomline. ... for all of those reasons; this ''is'' and will ''remain'' an E&P play.

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