Strictly: Drilling and oil-field services Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Strictly: Drilling and oil-field services

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: RGinPG who wrote (23665)	6/8/1998 10:28:00 PM
From: The Ox	Read Replies (2) of 95453

The more I read, the more I'm convinced that we may need to retest the lows on oil barrel prices before a true reversal can occur. I would not buy any stocks in this sector right now unless you have deep pockets and the patience to ride out another drop to $12+/- barrel prices. This is strickly my short term viewpoint. OPEC and non-OPEC oil producers, while having good intentions, have shown that they can't follow through with their commitments to cut production as declared in the press. Cuts done in April only added up to 40% of the initial commitments. Cuts in May were only 75%. Keep in mind most said that the initial cuts were too little to begin with. Now add the fact that these too low cuts weren't honored and we have another situation that will continue to weigh heavy on oil prices. Many initially called for 2MM/day barrel production cuts. This appears to be the minimum necessary at this time. I can't exactly blame the producing countries for starting with lowball cuts to test the waters. But it is now appearent that Asian oil demand will continue to be lower then expected. I think individual companies can be considered on their own merit and many of the stocks in the sector are so oversold that cases can be made for purchasing now. But I strongly suggest keeping the powder dry. There will be better bargains very soon, IMO. The same way one must often be patient waiting out a stock, now is the time that one should use the same patience with your "sideline" money that you wish to invest in this sector. One last issue I'd like to bring up. There are constant references to future earnings and forward P/Es and I think that these should not be used as the main valuation method in determining the best value in the sector. As we have seen recently with almost every stock in this sector, downward revisions are becoming common place and I believe they will continue to be forthcoming. Today's forward P/E of 9 maybe 15 or 25 in a few months. I think there is a great opportunity ahead and I don't see this as a doom and gloom post. I see this as the current trend and wishing things to be different won't make them so. Until significant reductions in oil stocks occur, I would continue to view this sector with extreme caution. Watch the news and watch the market sentiment. There will be a reversal, IMO, it's simply a matter of when. I don't subscribe to the $10 barrel price as the future of this sector, more likely $18. Best of luck to all, Michael

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next