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: Gottfried who wrote (33078)	12/18/1998 12:28:00 AM
From: Roebear	Respond to of 95453

Gottfried, Excellent post and TRUE in more than just oil! I was thinking of letting my IBD subscription expire, but perhaps I have not been appreciating its contrarian value enough.

To: Gottfried who wrote (33078)	12/18/1998 12:48:00 AM
From: Rob Shilling	Read Replies (1) \| Respond to of 95453

Something is going on, I just can't figure out what it is. The last time oil crashed like is has was in 1986, it rebounded quite quickly once OPEC started cutting. This time around, OPEC is cutting again, yes with some cheating, but there has been around a 3 mbpd cut since September. Yet, supposably there is still a glut of oil. But nobody ever puts a number on "the glut". I don't quite understand what is happening here. It may be a "rule change" in oil prices by the investment community. In 1990, there was 15 mbpd excess capacity that could be turned on in an instant, now there is 4-5 mbpd excess capacity and we have 50 year low oil prices. I am beginning to think that since real supply and demand are so close together now, oil traders no longer are using the "oil pumped compared to oil used" supply demand graph for oil prices. All of a sudden they seem to be using "oil pumped plus excess capacity compared to demand". Another possibility is that they may even simply be pricing oil at below cost until world-wide storage is down so low there are true shortages. I don't know, but oil prices would have rebounded by now in almost any other oil price drop we have ever seen. The numbers (and they are hardly ever reported) by IEA said there was around 2.7 billion barrels of oil in storage around the world at the end of September. That number was supposably 170 million barrels higher than the year before. Since September there has been around a 3 mbpd drawdown world-wide. That means that the 170 million barrel surplus is gone and storage is continuing to shrink. Yet oil prices are going lower still. The real strange part is that the IEA just confirmed that non-OPEC production is down too. That is now making the pumping vs. demand shortage at 5-6 mbpd and probably increasing as more non-OPEC production is shut in. Putting this in perspective the 2.7 billion storage world-wide will be ZERO in less than 18 months at this rate. One could argue that well before this storage goes to zero, the world will take notice. There is probably some bottom number of oil that has to be in storage to keep refiners running properly and economically. So spin or no spin, we are bound to see real shortages maybe as early as 6 months from now. Add in higher demand or loss of IRAQ oil, and who knows what will happen. Maybe somebody can tell me what the deal is, who is benefitting from this "new math" for oil prices ????

To: Gottfried who wrote (33078)	12/18/1998 8:26:00 AM
From: SliderOnTheBlack	Read Replies (2) \| Respond to of 95453

Gottfried; your post ''hammers'' home a major point - not to be forgotten... If that lesson from November 1997 is not a ''classic'' nothing is... We are seeing the ''flipside'' here... Buy when they are yelling ''sell''; and sell when they are yelling ''buy.'' No more proven technique exists imho... Illegal - no; but as so often seen on CNBC etc.; the talking heads, pundits and scribes - often are nothing more than conduits for a very select few market movers. The degree of ''unison'' in which seemingly the entire Street bought and then sold in unison; completely out of the blue - on the prior two run ups; is the endorsement of literally using the general tone on the street as a pure contrarian indicator. Never have I been so comfortably confident with buying the oilpatch. Another, little spoken to point of primary interest is - Watch the International Big Oil's as a ''real-world'' barometer on the future of the Oilpaatch. When they start tanking... then the gloom & doom may be a reality; but not before... Buy, buy now, buy big; but buy the best of the best imho; RIG DO RON WFT RDC SDC FGI VRC GLBL NOI and especially the high-tech/niche leaders like CXIPY SCSWF CDIS CLB PGO & VTS... and FLC for the risk oriented/high leverage proxy. The strong companies are here to stay and are at fabulous value levels here. In my opinion; the next 2 weeks are the end of bargain basement sale days... What more could there be to endure than an International Financial crisis (Russia, Brazil, Japan, LTC etc.), a total market crash, sub $10 Brent, a Presidential Impeachment and a Middle East War... if all ''the bad news'' is not wrung out here; I don't know when it will be...?