Re: Bob Bowker too
Hi marc,
---Bob Bowker, who has been bearish for many months, now says he believes we've seen the bottom
............................... labpuppy.com
A Snip from his Mar 12 commentary ----
<<<"... Once again, the timing, and the magnitude of the actual supply cuts will be an issue until this Summer, but the Saudi reversal of policy is a significant DIRECTIONAL shift in the supply equation.
These two DIRECTIONAL shifts should converge to mark the end of the decline in oil prices in this cycle. That said, however, the price of oil has already moved up over $2 per barrel on the OPEC news, and that news is still only a set of intentions – not a firm agreement and far from a real reduction in supply. Therefore, investors should not expect any further sharp increases in oil prices until after the OPEC meeting and after some preliminary results of April production are known.
Also, in the next few weeks, don't be surprised to see INCREASES in the API crude oil inventory numbers. Part of the game, when OPEC agrees to cut back production on a given date, is to over-produce by as much as possible before that deadline arrives. It that happens, it could cause some temporary setbacks in both oil prices and the energy stocks.
SO, TO SUMMARIZE THE GOOD NEWS, the bottom should now be behind us on a fundamental, long-term basis. While the Hughes rig count resumed its downtrend last week, declining by 7 to 534, the most likely scenario now is that the Rig Count will bottom out sometime in April.
So, what's the bad news? The bad news is that the sharp rally in the oil service stocks will probably falter to some extent in the near future. You have to remember that many of these stocks rose by 30% or more on the EXPECTATIONS of a 2% cut in world oil production starting in a month or so. This is more than enough appreciation for an OPEC promise. Also, between now and the OPEC meeting on the 23 rd, there won't be any more good news in the press – it's already been announced. Finally, while almost all of the stocks in the sector are now clearly in Short-term BUY territory, the price moves were so sharp, that they have reached technically Over-bought levels, which could generate some technical profit-taking next week. After that, though, you can expect the analysts to begin upgrading these stocks as the OPEC situation becomes clearer. Also, some institutional money should begin to flow into this sector over the next few months. ...">>> |
