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Pastimes : The New Qualcomm - write what you like thread. -- Ignore unavailable to you. Want to Upgrade?

To: JohnG who wrote (464)	10/1/1999 12:00:00 PM
From: qdog	Respond to of 12254

Link is a bit long... A few years back when everyone was enamoured with oil stocks, I sold. Primarily it was based on two factors, Iraq oil for food sales, which was pegged to a fix amount of money. Price drops per barrel, Iraq has to increase production to get to that fixed dollar amount. The second was the amount of crude coming online from various global projects. When Asia was in the very early stages of collapse, Bankgok went from a city where cars were every where to one were they were parked. So the inevitable more supply than demand was perfectly clear, albeit most analyst were yapping otherwise, which results in price drops for the underlining commodity. When oil dropped to $12, shutin's of marginal producing fields was inevitable combine with OPEC and big Non-OPEC production cutbacks plus Iraq produces less as the price rises. When empirical evidence that Asia was rebounding was the catalyst to jump back in. Right now, I think that crude is overpriced, but it could make it's way higher short term, but long term I think it will be lower. I think fairvalue is around $18-22/barrel for WTI. The industry is comfortable with that figure as well. The problem with prices is the commodity pits wild swings in sentiment. Price we pay for free markets. So the whiz kids will start flocking to oil stocks as the profits come in and when the industry report their capital expenditures for the coming year, services will rise as well. I stay away from predictor books. I do my research based on simple laws of supply and demand. Nothing stays static in the free enterprise system. When things look all great and glorious they probably fall and when things are gloomy they usually rise. Sounds contrain, but it really is not.