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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: karen m. blankenship who wrote (17265)3/30/1998 11:36:00 PM
From: marc chatman  Read Replies (2) of 95453
 
Karen, OPEC is not going to hold another emergency session and take additional action based on some news reports that the market has given its "thumbs down." This so called "thumbs down" is a trading reaction and has nothing to do with the supply/demand dynamics of the oil market.

Having said that, the trading can certainly take the price of oil much lower in the short-term. If I were buying oil, I would sure wait to see if the price gets lower. So I think we can expect to see a lack of buying interest over the next several days, at least. And where there are few buyers, even a moderate number of sellers and short sellers can take prices lower.

The same scenario is likely to play out with the stocks in the drilling and service sector. Will any of us (or, more importantly, will any institution) start buying tomorrow RIG, for example, at 53 if there is a good possibility it could be had next week in the 40's?

I think these stocks drop gradually on declining volume for several days until they get to perceived bargain levels. I agree with some comments made earlier that it is not likely we will drop below the lows of last week. by the time we get anywhwere near those levels, the Cramers of the world who missed out last week will be jumping all over these stocks.

One last comment -- expect to see virtually every analyst come out and trash the OPEC pact and the sector so that their firms can get in at lower prices. And remember these are probably the same analysts who praised the pact a week ago.
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