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

To: Chuzzlewit who wrote (10575)	2/4/1998 8:19:00 PM
From: Czechsinthemail	Read Replies (2) \| Respond to of 95453

Paul, Thanks for offering an invitation to discuss some of the fundamentals. Regarding Iraq: According to a Dow Jones article, their pipelines and pumping stations are in serious need of repairs. Some analysts maintain they will not be able to pump enough oil to meet the $2 billion currently authorized. Though they are authorized to buy spare parts, the repairs are estimated to take perhaps 6 months. The UN agreement specifies that most of the sales have to go through the pipeline through Turkey. That pipeline was capable of about 1.6 million barrels a day, but is now reduced to maybe 1 million a day. Iraq maintains they can produce 2.5 million barrels a day, but most analysts doubt it. Of that, about 700,000 goes to their domestic consumption and 100,000 is earmarked for sale to Jordan. Conceivably, if Iraq is allowed to sell everything they can produce, there will be a counterbalancing between more oil shipped and higher prices on what they ship compared with black market sales. Regarding Iran: I'm not sure how fast the detente with Iran will progress. I suspect it will be slow. I'm not sure what impact on the oil market it is likely to have, except that US anti-Iranian policy makes it harder to implement oil pipelines running through Iran. US Crude supply: US crude oil stocks fell about 880,000 barrels during the week of Jan 30. Refineries were operating at a slightly lower percentage of total capacity -- down about 1% to just under 91%. The general consensus is that there is a lot of crude oil around that may continue to depress prices. Divergent price action: Drilling stocks have recently been moving up with the stock market more than down with crude oil prices. That may be the emergence of a healthy uncoupling of stock and oil prices. If the companies are evaluated more as bargain stocks with high growth expectations, they should have continued strength. If we go back to fears of falling crude prices, they may weaken again. Though I think there is a stronger fundamental case for continuing strength, particularly if the overall stock market remains strong, we've all seen how the fear-based extrapolations of lower crude prices can torpedo these companies. I think for long term investors, there is substantial risk in being out of these companies because they may run up substantially and quickly. For those more inclined to trade, the combined vulnerability to stock market correction and further oil price weakness may mean another dip from here. If oil prices strengthen, these stocks should continue strong to the upside, with greater relative strength in the land drillers and shallow water drillers. I've been pruning and reallocating a bit, selling some of the shallow offshore companies to buy more RIG. I think its long term prospects look stronger and more reliable even if crude prices are weak, and its short term downside vulnerability is probably less. Also, they are scheduled to announce earnings next week, which should give it an instantly more attractive PE. good luck, Baird

To: Chuzzlewit who wrote (10575)	2/5/1998 1:39:00 AM
From: RGinPG	Read Replies (1) \| Respond to of 95453

I'm sorry, but I simply must respond to this "Look at how negative the indicators were on this thread a coouple of days ago and compare them to today. So much for TA's predictive power. Everybody's a genius in hindsight. " Who's TA was negative exactly a "coouple" of days ago. It wasn't mine, nor Thean's, nor P&F's or anyone's that I've read on this thread. Yes Thean's comments tend to be a little cautious and bearish sometimes, but he has been an overall bull on this sector for weeks (am I right Thean?). You can check my posts (#10391, #10251, #10092, #10073, #9967, #9966, #9955, #9087) and see that my indicators have not been "negative" (except #9087 which preceded the last significant dip), and in fact have had very good predictive power. Looking at the fundamentals alone is not enough to make money in this market, ask anyone who bought any of these fundamentally sound stocks last October. TA has been a powerful and profitable tool to supplement my fundamental analysis. What is your theory on how to make money in the market? Trying to predict what effect politics will have on the price of stocks? Give me a break, that has never been predictive and is not an objective way to invest. In addition the "major issues" driving these stocks right now are NOT the possibilities of military action, the major issues are EARNINGS, EARNINGS, EARNINGS, and recently the technicals have been catching up with the fundamentals. THOSE are the major issues.