Mike, don't you think that expectations are pretty low for anything of substance to come of this next OPEC meeting? Take last May's meeting: Ok they agreed to cut, PTL. But what did oil prices do? They continued down the same path, reaching $10 within seven months (Dec '98). They cheat, drag their feet, etc. Venezuela is only now this next month (Mar.) meeting their cut commitments from last May. That's 10 months. So even if additional cuts are announced, I don't see why the mkt will care that much, if it's going to take another 10 months to get the last foot-dragger to meet their commitment. And even when you're done with that, they cheat, they cheat, the glut, the glut, yada yada yada.
IMO genuine supply/demand is the only thing that will affect the price of oil, and the expectations for recovery in the OS sector. We have seen reports that Asian demand is picking back up. US and Canadian production has decreased, while demand in the U.S. is going up a little. lotsa wells are shut, etc. etc.
I think if one wants to get into the patch, or is already in and you don't want to cut your loss and leave, then the best thing is just to sit tight while supply/demand moves naturally back into balance. It will happen, albeit slowly and stealthily. At any rate, I feel I got a bargain with FLC at 5 15/16. If oil prices go up, FLC will go up. Oil prices have stabilized for now, and Dec. probably marked the low. |
