Art B re: your comments
First, the TREND is clearly not the oilpatch Bulls friend here of late... not with "7 consecutive downward demand revisions" from the IEA.
Secondly; any production shortfall by the Majors, Integrateds, or E&P's will gladly be marketshare eaten up by OPEC.
Art in my opinion; your point on the production shortfalls by US & Intl Producers doesn't build a bullish case for their LT shareprice, or even Oil prices; let alone the Cap Ex trend needed to buttress a further OSX rally; but rather merely points out the grim reality in the trend for OPEC to continually build Global market share; which exacerbates our dependance on foreign oil.
Unless the US Government is willing to subsidize the Oil Majors; I don't think XOM, CHV, or anyone else is going to fail to react to market prices & volatility and OPEC is now "large & in-charge" of volatility... it's become their best weapon & best friend.
XOM in this recent record price environment for O&G; commited a less than historic/mean average % of Cash Flow for Cap Ex. I think they realize that OPEC will introduce some volatility here.
For the near future I don't think OPEC will have any problem picking up any slack from the producers to meet global demand. I think the Saudi's in particular; are addressing their "capacity" issue with the foresight of eyeing ever larger pieces of the global marketshare pie.
The oilpatch will for the foreseeable future remain a "hot money" speculative cyclical sector as far as shareprices are concerned. I don't see the "boom to bust" cycles for shareprices ending anytime soon and OPEC has learned that Oil Price volatility (if managed) is the key to gaining market share.
The smartest thing OPEC could do here & now; is to take Oil down sharply to $15-$18. That would nip in the bud, the LT Cap Ex commitments from the Majors & non-OPEC producers. I don't think OPEC will allow prices to be sustained here to the level that non-OPEC producers will bring LT Cap Ex Project/Solutions to market that will take their market share.
As far as Energy Stocks are concerned; there will allways may be subniches that ride out the cyclical storms with less volatility... as far as individual stocks - P CHV XOM may, CPN, NRG, DYN, ENE, ORN may be a niche to play, or maybe SGR & FLR will be ? - but, none of them, UCL included; have escaped the recent energy downdraft & shareprice volatility.
For the domestic Nat Gas story; LNG, Coal, or even revisiting nuclear; along with alternative fuel development may dampen the prospects of those who see a sustained new paradigm for Nat Gas.
Personally; I'll give Nat Gas a higher "floor" for now; but not as high as many think... same boom to bust cycles; just better spin and a better promoted "sizzle" to the Bullish Story this time... and we still "busted" and if the economy continues to slow - we might not be done..."busting" yet.
I hope that most individual investors have learned via the NAZ Tech Wreck and yet another volatile Oilpatch Cycle; that the next time they hear - "this time it's different", or "we're entering a new paradigm/era" - it's time to start quickly "averaging out" into any & all further strength & to set tight/trailing stops.... because those words are now synonymous with the coming blow off stage of a sector cycle.
Many of us will agree to disagree; but it's good to see excellent point/couterpoint commentary from the likes of Art B & Meridian here...
For now; I'll remain - "once bitten - twice shy" (VBG) and all my Oilpatch Bull money is in the register; under lock & key - they "aint" getting it back & I don't anticipate an interim bottom being tempting enough for a "portfolio weighted" re-entry. A small trade, or two ? - surely; but no portfolio weighted re-entry... not untill BOTH - the global economy turns up AND the supply build trend strongly reverses.
Untill then, I see $18-22 Oil (wouldn't rule out $15-$18) and $2-$3 Nat Gas coming; and while those are still profitable price decks; they are NOT what new paradigms, or higher/highs for this cycle are made of...
In cyclicals; it's the "sizzle" that sells - not the steak and this cycle's sizzle/story is beyond well done - put a fork in it. |
