You raise some excellent questions. While I don't "know" the answers, I would like to contribute to an answer for those I have some info on.
- Will OPEC comply to present quota's ?
According to Saudi Arabia, OPEC compliance will be very high because most members are pumping at capacity to meet quotas. The interest of OPEC members in Western development confirms this statement.
- Will the seasonal build level off and will we start seeing draws ?
We have not seen any build on gasoline, which is the critical product to be building, in the past two weeks. Venezuela will not be making a large, previously expected, contribution to this years gas build. While this is bullish, it actually disturbs me because I need gas, and we are at dangerously low levels. We already know from truck and SUV sales that we will have another record driving season.
- Will Futures Traders support Crude at $25ish ?
They might not be as important a factor as usual in the near term. Refiners will HAVE to start buying crude to build the gas stocks. We will also have Japan, China, Korea, etc out there competing to buy excess supplies overseas. The foolish speculators were crucified last year. I suspect that not even Larry (I hate the oil industry) Kudlow is foolish enough to short crude under current circumstances, especially given OPEC's resolve to hold up prices. IMO They WILL reduce output if prices fall and stay down. They are NOT going to let 1998/9 repeat itself.
- Will the present Cap Ex spending trickle down by 2H 2000 to light the fire under the OSX stocks ?
I beleive you have an excellent point here. As balance sheets are repaired more cash will pour into the drillbit. It won't happen this quarter, and probably not next quarter, but it will happen. The real question is, will they be foolish and go back into debt up to the gills? I don't think so. If they were going to do that, why repair the balance sheets in the first place?
- Will the E&P & Integrated's get the valuation multiple expansion that their present earnings & commodity prices signal they should, or will the market make the bet on commodities reverting to the mean & OPEC cheating ?
No comment. I am biased but have no facts indicating a direction.
- Will the Oil Majors participate - RD reports next week, maybe that will help ?
No idea.
- Was this NASDQ recovery just a head-fake, setting up the Big Bang collapse yet to come - triggering a total market meltdown ?
I believe it was a head fake, but think we might experience the death of a thousand pin pricks over the spring and summer rather than a meltdown.
- Will Greenspan take his foot off the brake, will he "ease" merely another .25 basis points - which is allready completely priced & factored into the market, or will he hit us between the eyes with a .50 basis point hike ?
I agree with Jim on this one. Inflation is worse than people think due to the lag time from cause and effect. Greenspan will not ease off. I expect several quarter point hikes coming this year. |
