Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Post_Patrol who wrote (64050)	4/7/2000 11:27:00 AM
From: ItsAllCyclical	Read Replies (1) \| Respond to of 95453

>> This sector still trades on the "price of oil" not on future expectations and oil is going down. << Ok, then how come the XOI, XNG and OSX have rallied considerably while oil has come down from $34 to $25? Floor effect, removal of uncertainty. More important than the price of oil is the likelyhood of oil staying above $18 long term. This sideways action in the OSX and XOI is related more to the tech rally. Earnings expectations for OSX will improve considerably from this quarter on out. If OPEC manages to erase the doubt about a price band watch this sector fly. We also have yet to see the majors increase their exploration budgets but they will soon. This will be HUGE when it finally happens. Too many potential drivers out there imho. Yes many OSX are getting pricey, but the XOI and XNG still have 30-50% upside. There are plenty of OSX laggards. This boom will likely last beyond 2001 and eclipse the old highs. That's why the OSX stocks are trading at a premium now.

To: Post_Patrol who wrote (64050)	4/7/2000 11:30:00 AM
From: Big Dog	Read Replies (4) \| Respond to of 95453

From "Tomorrow's Oil": There may be less spare capacity in the world oil supply system than is widely assumed. Rhetoric, diplomacy and gamemanship aside, it seems probable that capacity has shrunk in the last year or two. Next year and beyond, the non-OPEC offshore, the recent leader in oil production growth, will struggle to maintain any net increase in supply. Meantime, old field decline has begune to run away as older fields falter and as investment in sustaining output starves. Both the private and the state sectors have spent less money on new oil production capacity since the oil price collapse of early 1998. As a consequence, global spare capacity may be as little as 3 Mbd of crude oil, mostly in the Arabian Peninsula. Looking ahead, the combination of revived demand and more persistent decline rates may outpace drilling in old fields and new field development work. The result would be steady erosion of the remaining capacity over the next five years. Oil prices at $30 in recent months have been a function of production cutbacks of a nominal 4.3 Mbd and an actual 3.3Mbd during 1999. It is assumed that an easing of these restrictions will restore oil prices to a moderate level either side of $20 a barrel. This expectation of OPEC action at its March meeting duly softened prices ahead of a decision. But the focus on market management has distracted commentators and price setters from what looks like further capacity erosion during the next two years. The safety margin of spare capacity would slip to around 3%, too small to secure moderate prices. There is time to reverse the shrinking margin by 2002 or 2003, and there is money too. But the oil market has erratic arithmetic. The EIA puts current spare capacity at 6.3Mbd while the Center for Global Energy Studies reports an increase in nameplate capacity of 2Mbd since early 1998. A look at the data for individual fields and countries suggests that the reverse may be true. big