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

To: diana g who wrote (31551)	11/6/1998 12:35:00 PM
From: upanddown	Respond to of 95453

Diana: According to Ron's chart osxstocks.com it is very difficult to find much correlation between sector and oil prices, especially since the beginning of 1997. Logic tells me that anticipation of higher demand causing a spike in sector prices should be accompanied by anticipation of tighter oil markets causing a spike in oil prices but it really doesn't seem to be there. There are probably just too many factors affecting each market. One could attribute todays oil price move to Iraq but not the OS sector move. I think recent strength in OS stocks can be mostly attributed to the extremely positive tone of the general market. In the unlikely event that the market rolls over in the near-term, this sector will suffer. If the general market continues up at this pace, we should do fine as an oasis of relative under-valuation. John

To: diana g who wrote (31551)	11/6/1998 5:52:00 PM
From: Big Dog	Read Replies (2) \| Respond to of 95453

lady di g -- (dig it?) First, thank you for your kind comments. I see you have put a lot of thought into your ideas. But I think you should quit talking to Socrates. He is of a breed that is known to be inferior to the line of King Canines from which speweth my genetic code. All of the Dog Kingdom know that words from the line of Socrates are mere heresy and the mutterings of a frothy-mouthed peasant beast. While you are to be lauded for taking in and giving care to such a low form of life, please do not heed his advice on the matters of oil, for it is with contempt and evil desire that he tries to misinform you. In this way, he knows you will not be comimg to riches and will not, therefore, cast him aside on the day you can afford the luxury of one of the King Canine line, such as His Doggedness. With that said, and on a more serious note, I respectfully disagree with most everything you say in the referenced post. Yes, you have logic on your side -- IF issues are reduced, or enlarged, to the ridiculous, and no consideration of the real world is taken into account. If demand doubles, as you say, (which it won't), you can be 100% sure the price of oil will sky rocket. If demand shrinks by half (which it won't), you can be 100% sure that oil prices will be much lower...even below production costs. Time is the critical factor. Neither of the above scenarios can continue for any substantial length of time before either demand is decreased or supply is increased. The rise of stocks and the fortunes of companies are not linked for the "short term". Perhaps fundamentals will catch up with technicals before another decline, I don't know. Tell Noble Drilling that the price of oil has nothing to do with the cancellation of their highest earning jackup. It has EVERYTHING to do with it. If the jackup doesn't work at the high rate, Noble don't make the cake. If it don't make the cake, then why have a higher stock price? It ain't gettin' better out there folks. Don't let the price of the stocks make you think all is well in the patch... I think we only have a dead cat bounce here. I have sold WFT at 28 twice and bought it back at 26 twice in the last week or so. I sold FGII at 18 and have an order in to buy back at 16 1/2. I bet it gets filled early next week. To me this seems the way to gamble for now. I also bought PKD today at 5 and will sell at 6 or at 4 3/4 -- whichever comes first. Deer harvest season opens this weekend...the hiways are fully of camo, guns, and Bud Lite...not a good day to be driving on I-10 west to the Texas Hill Country. I'm gonna let my Bambi's get a little fatter before the big breakfast blast. big loosbrock.com

To: diana g who wrote (31551)	11/7/1998 9:21:00 AM
From: JZGalt	Respond to of 95453

diana, you dog has it partially right. If you look at the economics of the oil production and service industries, the laws of supply and demand are ruthlessly applied (one point for the greek dog). The price of oil is less and less in the hands of OPEC and more and more in the hands of non-OPEC countries and those countries are more and more indebted to the G7 countries and therefore more and more subject tot he laws of supply and demand vs. a cartel. You have a situation now where too many areas of the world want to ship oil to get hard currency to support their economies. In the days before the North Sea fields, OPEC could dictate price. Now there are a significant number of oil production fields which are under the control of countries which owe a ton of money to foreign banks and the IMF. Until they get out from under this level of debt and until the demand comes back in the economies of the world, it is unlikely that oil prices will rise more than a moderate amount barring some sort of showdown with Iraq or other turmoil in the middle east. The newest fields being exploited are in Baku, off the coast of west Africa, off the coast of Venezuela and Brazil biz.yahoo.com . Do you honestly believe these areas will restrict the flow of oil to satisfy the need of OPEC? Unlikely... It seems like the oil companies agree that the price is going to remain low. They are voting with their pocketbooks. Less wells drilled, less exploration done. loosbrock.com Latest futures charts once again show oil prices weakening after a rally on supply disruption of Georges. tfc-charts.w2d.com Weekly charts show a possible bottoming pattern, but nothing to suggest a full blown recovery any time soon. tfc-charts.w2d.com The oil industry is cheap given a long enough time horizon, but I think we are stuck at sub-$18 oil until the world economies settle down and some of the recent excesses in Russia and Brazil are worked off. The November meeting of OPEC will need to announce productions cuts just to keep the status quo since the IMF has virtually assured a worldwide recession via it's actions in the past 9 months. The latest action in Brazil assures one of the US's largest markets will have a greatly decreased demand for US products over the next year to 18 months which will decrease production of goods in the US and decrease the energy demand slightly in the US. In 1997 we had started to see the beginnings of commodity gluts as more and more emerging markets went after hard currencies to support their inflated currencies. I don't see that trend changing direction anytime soon. I originally bought oil service stocks because the supply of offshore rigs was tight, and I didn't think the "Asian contagion" would spread. Russia and Brazil changed that tune. The oil industry might be a bargain if you have a time horizon of greater than 5 years, but I believe that you will have plenty of time to buy vs. sitting with a relatively stagnant investment while the world gets it act together.