Thanks, this echo's my thoughts.
Here's another gem from Steve King:
Oil companies are the Surprise Winners in OPEC Agreement
OPEC?s decision to raise oil production should serve the interests of both American drivers and Middle Eastern crude exporters?but the biggest winner of all may be international energy companies. Yesterday, shares of top companies Exxon Mobil, Chevron, and Texaco? which failed to win over investors even when crude oil prices reached nine-year highs?all rose smartly after the Organization of Petroleum Exporting Countries said it planned to turn up the taps by 1.45 million barrels a day. By midday Wednesday, Exxon Mobil rose 4-1/8 to 80-7/16, Texaco rose 2 to 53-1/16, and Chevron climbed 2-3/8 to 87-1/4 on the New York Stock Exchange.
Soaring crude prices will also help Canadian energy firms, and stable oil prices could lure back investors, some Canadian analysts and big investors said on Wednesday. Despite nine-year high prices for oil and natural gas, and the backdrop of growing demand and perceived supply shortages, stocks in the sector remain cheap when assessed using conventional valuation techniques.
Companies on both sides of the boarder find themselves in the curious position of wallowing in cash while hoping for a fall in oil prices to rekindle investor interest in their shares.
?Great first-quarter results won?t be enough,? said Josef Schachter of Schachter Asset Management, a fund manager in Calgary. ?We need to see stable oil prices at around $25 a barrel for two months or so.?
Jim Falvey, Dresdner Kleinwort Benson, said the move reflected confidence among investors that oil prices will settle into a less volatile range following the OPEC meeting. ?People felt the longer crude oil was above $30 a barrel, the faster (it) was going to fall to $10 a barrel,? he said. ?That, coupled with fact that we?re going to see unbelievable first-quarter earnings has pulled investors back in,? he added.
Share prices failed to aggressively move even as commodity prices roughly tripled between mid-February last year and mid-February this year. In fact, Chevron?s stock declined and shares of Texaco?s rose less than one percent as the stock market swooned over technology companies.
Oil drilling companies?which have been surging recently?may also feel the benefit of the OPEC agreement. Stable crude oil prices and strong exploration and production earnings will likely create more demand in the drilling business. Oil drilling and service companies Baker Hughes, Schlumberger and Halliburton all rose following the OPEC agreement Wednesday.
?While crude oil may come down, it is still likely to average $26 a barrel this year,? said Lewis Ropp of Frost Securities in Dallas. ?That?s going to create a lot of cash flow for exploration and production companies, which will then trickle down to the drilling firms.?
This could be the best buying opportunity of individual investors in the last ten years. The large brokerage houses are raising ratings biz.yahoo.com and the bigger companies themselves are looking. Yesterday, Italy?s ENI announced that it was buying Buy British-Borneo quote.bloomberg.com mnu=news&ptitle=Top%20Financial%20News&tpð_fin&T=news_storypage99.ht &sü88e917c661549437d2536fc6e122c0.
As the uneducated investors rotate out of the tech stocks, where are they going to go? |
