Bull; re: OPEC - you are 110% correctamundo; OPEC has a "catch-22" situation
If they raise production - the Spin Doctors, Commodity traders, Intnl Govmnt's, Industries sensitive to crude - airlines, transpo's etc all pile on & do everything possible to push crude prices down.
OPEC has to maintain cuts here and the maintenance of cuts virtually guarantees $30 crude oil on strictly the mathematical historic supply numbers.
Now if "Metaphysical" Bull is right about the vastly underestimated Asian & International demand growth - we could see something like mid-high $30's and the "talk" of $40 crude oil before this thing is over.
We will know when OPEC is going to ease production. It will be when everyone at work around the water cooler is talking about OPEC & Oil Prices, when every headline on the magazine rack has blurb's on Oil Prices, OPEC etc. and when Barrons, News Week, Time and all the Cable/TV business shows have OPEC & Crude Prices as the lead story.
Maybe this peaks around the labor day peak demand driving season in the US ? - this is also the peak of the "contra-seasonal" spike of Natural Gas Prices that we have begun to see - a great time to take profits in Oilpatch stocks - especially Nat Gas oriented E&P's.
The Nat Gas story that we thought we may see this year did not unfold due to weather. But, in very simplistic thinking; I love it - as $2.25 Nat Gas is extrememly bullish for the E&P's here - and the odds are extremely strong that perhaps we see 2-3 years in a row now, of extremely cold winters. Next Winter may be the year we see $3-$4 NG - NBL BR EOG here and on ANY weakness become tremendous buys.
I really like Apache here. We are seeing merely the early birds on sector rotation here presently imho. The real "MO-MO" money is not here yet. After this earnings season is finished and we get past the March OPEC meeting hurdle; we may be poised for a 35-40% 4-6 week OSX rally where we just bust out & run like scaled dogs sectorwide. Apache is going to be a prime recepient of strong Institutional buying interest - I see them blowing through $50 like a knife through butter. Apache has done everything right of late - strong, strong , strong company.
The mid capish names like UPR OEI PXD VPI are also superb values and these stocks are still priced where they were when the OSX was around 70-72. The momenteum fav's are getting a bit ahead of themselves - small cap laggards & E&P's are going to get a strong flow of funds here shortly.
RRC - did you guys see those hedging numbers on Nat Gas ? Finally, we are going to see the upside to hedging from many of these companies. I am keeping "some" money in these small caps CRK RGO TMR RRC all look poised to do well.
In driller service; GLM FLC DO are still a bit cheaper than their peers - I was going to trade GLM, knowing that some fundies would be coming to that laggard & missed the 4 Million share move yesterday - still cheaper than their peers. RIG still has tremendous upside left, but I am waiting to add on a dip.
UFAB GIFI - looking like buys, OII NOI reasonable - lots of room to run, CXIPY SCSWF BWG CDIS are in a great niche, vRC GLBL buys on any retrace - lots of room to move up thru the maturation of the cycle,BHI is a steal - I will load on this one at $20 - praying for a retrace on Baker, maybe calls as well @$20 if seen, HAL isn't a bad call either on any weakness here, PTEN cheaper than NBR UTI, GW still room to move, NBR is an institutional fav' and has some real upside earnings capacity at peak cycle - could see a $60 stock someday there at peak cycle - a core hold on any major retrace there,boats still cheap - I like TMAR GMRK vs. TDW for more upside, VTS & PGO are 2 of my fav's here - both really, really cheap here & seismic is very, very leveraged to mid-late cycle earnings ramping, IO is dirt cheap as well and then the fav's of SII CAM WFT ESV NE et al - on a retrace are of course going to lead the next major leg thru OSX 100 and onto OSX 120 - which looks like a good Memorial Day Target potentially - if not then; by the 4th of July imo.
Interesting time right here... OPEC is the key and they have absolutely no choice , no option other than maintaining cuts here.
$30 crude here we come... |
