Strictly: Drilling and oil-field services Message Board

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

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To: AltLar who wrote (41691)	4/6/1999 5:12:00 PM
From: SliderOnTheBlack	Read Replies (1) of 95453

FGI shorts... and - ''Charlie Maxwell - shorting Oil'' .... I do not think that the FGI ''shorts'' are traditional shorts. Let's just say look at it as a hedge - at $18-$20 -$22+ we would be in a clear recovery mode - this is also about where FGI incurred its heavy shorting pricewise if I recall.... this is not a trading short imho, but a 'hedged'' short ....every asks why not options then ? - options take too much time/mgmt - can expire worthless - have a higher cost ultimately in many cases - and this is merely a simplistic hedge; purely - ''my'' opinion. Also - nothing market-actionwise has shown me any reason to change my thinking... common sense would have dictated covering at $10-12 and they were NOT covered ! ...per Charlie Maxwell's short Oil call - he is right; from a sheer trading standpoint - there will be shorting prior to the initial OPEC reporting. Also; why are we even fixated on $16-17+ crude here ? The Street isn't assigning any of the Oilpatch stocks valuations above where $14-$15 Oil is indicative ! - so they have all ready tipped their hand that they are not going to support crude prices here imho.... they want to know what OPEC is going to do compliance-wise. There is nothing wrong with a $14-$16 trading range in Crude Oil here ! - I would rather see OPEC still incentivized - ''NOT'' to cheat ! With $17 crude - hard not to expect cheating imho; with $14-15 they comply with cuts.... I say lets bring on that $14 Oil !!! Right now some refiners, intergrateds & E&P's are reaping the rewards at the pump - that is why I am heavilly weighted in those areas presently. As crude retraces - I will rotate into drillers and service stocks inch, by inch as I think that nearterm - OPEC's compliance is actually more important than a $1-2 move/swing in Crude Prices to the Intnl Oils - as they will look at the next 6-18 month trend in calculating Cap Ex expenditures. OPEC's compliance is the most important factor in that calculation. Any upside demand surprise from Asia is gravy. For the drillers & service companies - the Oil Majors will start Nat Gas Drilling soon - they have too and when they see OPEC compliance at $14-16 - they will anticipate $18 in 2000 and cap ex budgets will start to move the Oilpatch again.... it is better for us to move dollar by dollar - quarter by quarter - rather than $3-4 overnight imho...I know that sounds strange - but the Street refuses to assign any value for anything over $14-15 here anyway...

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