Diana,
Let me comment on the pair of if's and this paragraph:
"I agree that if there is minimal Asian (or other) demand growth, and no production reduction, then oil price recovery may well be far off. But that's a big pair of 'Ifs', I think, and we must take into account that the market looks forward quite a distance, and that other market segments prices will affect the attractiveness of this sector."
1. Asian recovery - counting all pac-rim countries including the biggies (Japan and China), the chance for a overall recovery enough to stimulate stronger oil demand than in 1998 is pretty small. Overcapacity is the culprit in short.
2. Production reduction - have you seen the latest OPEC adherance rate to their promised cut? They have played this game long enough may be someday people will wake up and realize that this is just a game they play.
3. "Market looks forward quite a distance" - in a lot of other sectors, absolutely. For this sector, the answer is no IMO. If you have stuck around long enough to live through the beginning of the decline in Oct-Nov 1997, you would have realized that dayrate and oil price peaked at that almost same time frame as well. It was all downhill from there. True money investing in this sector wants to see "show me the money" first, and then they move in - big time I might add. For those who have lived through this industry for at least 20 years, one can pretty much sum it up as the Dog's favorite phrase - "it's the price of oil, stupid".
OT - about my previous post that had insulted some people - it was not prudent on my part in retrospect and I offer my apologies. However, I stick to the spirit of the message - those who really feel insulted know who they are. |
