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

To: Elmer who wrote (25504)	7/10/1998 10:18:00 PM
From: P.Prazeres	Respond to of 95453

Elmer, One word: EXACTLY!

To: Elmer who wrote (25504)	7/10/1998 11:44:00 PM
From: wolfdog2	Respond to of 95453

Elmer, good point. I agree. The significant measure should be days' inventories not absolute inventory levels. But as you point out even absolute inventory levels are not bad.

To: Elmer who wrote (25504)	7/11/1998 2:33:00 AM
From: SliderOnTheBlack	Read Replies (2) \| Respond to of 95453

Elmer; ...Bingo ! - you got it ! Traders are setting the prices, both in oil and in the market - since our oil patch stocks are now just a ''proxy'' for oil prices anyway... Remember the veiled threat/warning from the Saudi Oil Minister and his very strong remarks about the ''traders'' ... While I agree that OPEC can not influence actual price action to the degree they once could, or that the general public thinks they can; this ''Oil glut'' is over-hyped and this market is way over ''trader impacted'' with all the shorts and commodity based price proxy. Cross Timbers and others, with years of experience are not going to place a $139 Million Dollar Bet by investing in these companies if they were not 110% sure on the ''reality'' of this market, supply & demand-wise. A great point is that there is a 2 month lag in reporting supply - sounds like an opportunity to beat the crowd to the party. What no one is talking about (much anyway) is what is going to happen when Asian/worldwide demand surges ? With production capacity being reduced and if we see delays/cancellations in E&P projects; we could see a huge gap up in crude prices. No one ever got rich by buying at the top and rarely by following the crowd. From Peter Lynch's classic S&L buys, James Cramers recent talk about the 1990-1 US Bank stocks in comparison to Japan today, to all the bottom fishing done by Warren Buffet; this is a classic contrarion buying opportunity - when the short's start getting greedy and all the news is extremely negative, when all the analysts have downgraded and no hope seems to be in sight --- that is the time to buy & that time is now... As far as calling a bottom is concerned; look at the retracement of many stocks from the peak in the Fall of 1997 to the January sell off & back up to the next sell off in March and the rise through April-May to the recent sell off. There are many examples of the bottom being about 10% below the prior sell of lows... In my thinking overall - most stocks should see strong support at 10% below their March sell off levels. What is amazing is that we are much less likely to see $10-$12 crude - as back in Jan & March - we did not know what OPEC would do and the Ridayh pact came along as well. Now we at least know the target numbers from OPEC, we have seen some supply reduction and soon we will have the earnings coming out reflecting the softer dayrates for drillers and corresponding weakness in other sectors.With the bottom being at least more clearly identified and the downside considerably reduced; why are we going lower than the Jan & March selloffs ? - when there was no info on what OPEC would do and the bottom was unknown - what would dayrates go to etc, - it was impossible for analysts to predict earnings with unknown dayrates reductions etc. Now we have all this info and we are going lower still; why ? --- I say because of artificial manipulation by commodity traders of OIL - and the resulting proxy reaction by the oil sector. The fundamentals and the future are much more clearly defined now than back in January or March - it makes much more sense to buy now than then and now these stocks are cheaper than ever ! Stocks like DO and or FLC to be making new 52 week lows with all the new guaranteed deepwater contracts coming from newbuilds just now coming online is ludicrous - especially DO with their low debt/low cost structure. Companies with great backlogs like HLX, FGII, VRC and those in great niches like deepwater/subsea contractors SCSWF & CXIPY coming off major contract announcements and being sold off to these levels are simply situations to take advantage of - blatant buying opportunities. Some ugly statistics out there --how about in 1 week CDG down 17%, FGII down 14%, DO down 11% and the OSX down 8.5% ! Talk about an over reaction !With CDG being down 35% in the last 3 months, but 17% in a week - I see this as not necessarilly ''the bottom'' but as a classic oversold spike - and a prudent time to buy/average down; especially in light of its single digit PE for greatly reduced 1999 earnings estimates. CDG & EVI I like especially well, along with DO as these 2 have led each breakout from prior sell offs and are way oversold in relation to their peers currently. I think a good rule of thumb for forward buying decisions is to have a fundamental list of those companies that you like and select a target price and/or keep comparison charts weekly of peer/sector groups and when you see a particular driller or service stock get dumped/oversold in relation to their peers - off of no news or fundamental change - then seize the opportunity & buy. IMHO, the traders/shorts are making a last run prior to earnings releases... I think we will have positive earnings overall and see a slight & gradual rise in prices; with the ''biggie'' being the July supply level stats and info on OPEC's production compliance - as this will move crude prices which unfortunately will move the sector.