Hi Guys.
Thought I’d make an intro here as a foil to Slider, just to philosophize along with him and the boom boom crew.
Like the rest of you, I’m watching the O&G markets and wondering where it goes from hither. Does the GS pump of this week, weigh more on the scales of oil market outcomes than growing inventories in the shoulder? Or like the internet stocks of yore, have we repealed the basics? Oil and gas inventories, like revenues to internet stocks no longer seem to matter? Oil and gas stocks are no longer cyclical? The commodity is no longer to be shunned but to be embraced as a long term investment? At what point do inventories matter if they do? Do they need to be 25-30% above a 3 year average before they matter in these times? Last week market sentiment seemed to outweigh inventories, and as we saw with the internets, markets can extend themselves way out on a limb sometimes before sanity saws the limb in half.
Will any amount of price increase slow global growth or do China and India steam ahead even at $60 oil? Will interest rates and higher oil and gas prices rise to the extent the US economy catches cold? Where is the breakover point?
What portends for sales of SUV’s, airlines, trucking, and other industries which are most fuel sensitive? Can the US stock market float in the face of rising oil prices point forward? Do rates go up or down from here as oil prices rise? Maybe the answer to that depends on inflationary pressure. I wonder if the fed can contain inflation as oil goes
to $100 if it does without some strong rate medicine? So, to some extent higher prices accelerating from here, may cause airlines, truckers, and others to raise prices to survive
and the fed may have to raise rates to choke off demand, and then maybe that’s where the cycle corrects itself?
It seems that the oil and service sector analysts are morphing into Jack Grubmans and Henry Blodgetts and pointing toward the bleachers in centerfield, and soon Rig will be $140 and Apache $300/share.
As you can see I have lots of questions and few answers. One thing I feel more certain of is that from here, the market cannot go anywhere but down from here unless oil prices come down some and seem to stabilize and if both oil and interest rates continue up, I am almost certain the market as a whole will suffer a potentially large correction.
The sector is up like 30% in Q1……and GS is pointing to the bleachers. Are they Babe Ruth or Shoeless Joe Jackson? |
