Jim,
"I doubt you ever see OSX in the low 40's, that would be lower than the OSX got when oil was selling for $10.00."
Somewhere between us and among the group here we might be able to figure this one out. Yes, the OSX hit about 45-46 in 1998 but that was only with the Asian contagion and inventory build debacle of 1997-98, a world wide slowdown but not, as I recall, a world wide recession.
True, some stocks are beginning to look like bargains (GLBL, TMAR, TDW) but others have a good way to go to retrace their 1998 lows.
Although I know that the continued pumping of oil through the Asian contraction caused inventories to brim over and oil to fall to $10, I wonder if the stock values of the drilling companies might fall below 1998 troughs even with oil at a $14-18 price if the world outlook (demand) were bad enough? In other words, 1997-98 was an inventory related commodity price spiral. What if our current woes (and OPEC's decisions) do not fill the inventories to overflowing but still reduce drilling action, rig counts and day rates (and the prospect for such going forward, into a visibility zero fog) such that we see a RIG at $13, NBR at $12 and GW at $1?
This isn't my version of "it's different this time," but rather my favorite question of "how could it be different this time?"
Kb |
