Pilot from Briefing.com
15:10 ET ******
OIL STOCKS: With so much press being devoted to Bill/Monica, Russia/Brazil and
Sosa/McGwire, no one seems to be paying attention to oilfield drilling/services stocks,
except for the fund managers who have been sneaking back into this ravaged group in
search of value. Over the past several trading sessions, volume has picked up and
numerous group names have mounted impressive rallies off 52-week lows. Since
Wednesday, Smith International (SII 28 11/16 +2 13/16) has raced 38%, Cooper
Cameron (RON 34 9/16 +2 9/16) has soared 30%, Cliffs Drilling Company (CDG 22
3/4 +1 1/8) has rallied 24%, while Friede Goldman (FGII 16 1/4 +1 1/16), Halliburton
Company (HAL 34 1/4 +1 7/16) and R&B Falcon Corp. (FLC 13 13/16 +11/16)
have each advanced 20%. Latest rally being ignited by heightened concerns of military
conflict in the Middle East. Crude oil has risen more than 2% on the session to $14.62 a
barrel after Iran made military threats toward Afghan militia group, Taliban. Iran, which
is the world's 4th-largest oil producer (accounting for approx. 5% of world output last
year), is charging the militia with killing nine Iranian diplomats. Traders are speculating
that any conflict between Iran and Afghanistan could draw in Pakistan, which recently
demonstrated its nuclear capabilities. While strength of group rally over the past several
sessions has been impressive, there is still little evidence of improved supply/demand
situation. Moreover, analysts have already factored in moderate increase in
intermediate-term oil outlook into their earnings estimates. *(Was less than a yr-ago that
group was predicted to log 20%-30% earnings growth. Now estimates suggest that
most names will be lucky to produce any yr/yr growth at all.)
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