To: SJS who wrote (7982 ) 3/29/1999 5:05:00 PM From: SJS Read Replies (1) | Respond to
OIL Stocks:Fed may not be as pleased with the recent trend as this will certainly fan whatever flames remain on the inflation front. Still, because so many oil producers have felt the major pinch from a reduction in crude prices, the Fed is likely to tolerate it for a brief period. Since early February, spot crude prices have moved up more than $4 per barrel and are currently quoted around $16.25 with an upward bias to spot trend. While two months do not make a trend, already Wall Street is speaking more favorably about this sector that has seen some awful times during the past year. For the second consecutive day, a leading Wall Street firm has issued a positive outlook about the oil sector which is allowing certain issues to continue their price advances. To be sure, leading oilfield services like Halliburton (HAL 30 3/8 +2 1/4), Baker Hughes (BHI 24 5/8 +13/16), and Schlumberger (SLB 61 1/8 +1 5/8) should be the first to benefit from the rebound in oil prices, although other players should also benefit from the upward price trend. In the last couple of weeks, many issues like R&B Falcon (FLC 9 7/8), Cooper Cameron (CAM 35 1/16 +1 1/16), and Marine Drilling (MRL 11 1/2 +1 3/16) have seen their share prices turn around. While it is too early to say whether these price gains will stick, Wall Street is certainly much more comfortable about earnings estimates now that spot crude is trading above the $16 mark. Should the upward trend continue to the $18 level, many of these issues will certainly continue to benefit. Unfortunately, higher oil prices will mean higher inflation, which the Fed may not be so kind to support or accommodate.
