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re: Oil stocks...are you buying?
Posted on 1/19/16 at 6:27 am to Chuker
Posted on 1/19/16 at 6:27 am to Chuker
Generally agree. OPEC producers haven't been silent on where they need the price at. And supply, production more specifically, isn't accurately tracked if you look at EIA methodology. In this country for example, the only real time production figure used is Alaska. So EIA adjusts production number retroactively due to supply not matching in more recent reports. Look it up if you don't believe me.
I'm not sure how IEA works their reports.
I'm not suggesting we have a deficit as some actually are, but I do think when this turns, it turns in a hurry as the data that drives sentiment is not only in arrears, but not entirely accurate. Also takes time to ramp up production.
Big picture to me is that if one was buying stocks in a major oil company at current oil prices, although they could still see price decline both in terms of oil and share price, they're going to be o.k. I don't see a prolonged stay in the $20s if that's where we go.
Record shorts held right now by hedge funds. But there is so much hedging by producers, short contracts by speculators won't have the same stranglehold on this specific commodity as they do on gold as an example. Not to say the big boys won't keep selling to unwind. But that game will run out eventually.
Even if I end up being wronger than wrong, I'm targeting larger oil companies (with downstream operations that are helped by lower oil prices), and I hardly think long term any of these disappear.
Edit. Thanks Omada.
I'm not sure how IEA works their reports.
I'm not suggesting we have a deficit as some actually are, but I do think when this turns, it turns in a hurry as the data that drives sentiment is not only in arrears, but not entirely accurate. Also takes time to ramp up production.
Big picture to me is that if one was buying stocks in a major oil company at current oil prices, although they could still see price decline both in terms of oil and share price, they're going to be o.k. I don't see a prolonged stay in the $20s if that's where we go.
Record shorts held right now by hedge funds. But there is so much hedging by producers, short contracts by speculators won't have the same stranglehold on this specific commodity as they do on gold as an example. Not to say the big boys won't keep selling to unwind. But that game will run out eventually.
Even if I end up being wronger than wrong, I'm targeting larger oil companies (with downstream operations that are helped by lower oil prices), and I hardly think long term any of these disappear.
Edit. Thanks Omada.
This post was edited on 1/19/16 at 6:36 am
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Posted on 1/19/16 at 6:34 am to GREENHEAD22
quote:
And caveman I am expect to see a lot of shale producers starting to go belly up in the spring time. And after thinking about it below 20 is probably a good possibility. However SA is hemorrhaging money and under a lot of pressure to start cutting back. Some of the other gulf states are starting to change their tunes of cutting production including Oman. That being said another recession hits and all bets are off.
Mearly driving a producer out of business so someone else can buy their assets to continue producing is not the goal of the current price war. The big boy (Aramco) knows that if the production is not destroyed it will simply lead to the production comming back on line and the cycle repeating itself.
The blood is going to flow for quite a bit longer and will likely flow much harder before this is done. The players driving this situation at present are increasing production as fast as they can for one reason and one reason only.
Before this ends producers are going to be P&A'ing producting wells because they can not afford to produce them and drilling rigs are going to sell for scrap value, there is no other way out for OPEC and the Saudi's are going to hold their feet to the fire.
Crude prices are a lagging indicator not a leader in this current scenario, in other words the bottom is dark, cold, and still a bit far away.
JMHO
Posted on 1/19/16 at 7:37 am to C-Bear
quote:
I heard a rumor about FCX yesterday...wanting to sell quite a few GoM assets.
I heard the same thing. "Quite a few" being an understatement.
Posted on 1/19/16 at 8:09 am to TigerDeBaiter
If it's junk then Fieldwood will probably buy it
Posted on 1/19/16 at 8:50 am to yellowfin
quote:
If it's junk then Fieldwood will probably buy it
I've always heard this said, but didn't quite believe it til this year when I was fishing out at some of their platforms.
Yikes!
Posted on 1/19/16 at 9:29 am to TigerDeBaiter
quote:
I heard the same thing. "Quite a few" being an understatement.
Maybe Moffet will go start another company to buy the FCX assets.
Posted on 1/19/16 at 1:30 pm to cave canem
even if we hit some semblance of support levels soon for light sweet and brent we could stay in a sideways trend for awhile. It's happened before for years with no more than 10 to 15 dollars separating the highs and lows.
Posted on 1/19/16 at 1:31 pm to LSUneaux
Deep plunge in the last hour. COP now down another 8.2% on the day.
Posted on 1/19/16 at 1:47 pm to LSUneaux
My company stock dropped below $1 today. shite
Posted on 1/19/16 at 1:53 pm to LSUneaux
Cop for $36???
Posted on 1/19/16 at 2:31 pm to LSUneaux
quote:
COP now down another 8.2% on the day.
looks like time for me to buy more.
Posted on 1/19/16 at 2:43 pm to TheIndulger
quote:
My company stock dropped below $1 today. shite
you work for BBEP?
72% dividend yield. Can you smell the desperation here?
Posted on 1/19/16 at 4:15 pm to Fat Bastard
Wow that's a high dividend.. I'm sure they are gonna scrap the dividend soon
Posted on 1/19/16 at 6:11 pm to TheIndulger
When? From what I read here and elsewhere, we could visit the $20's. Most say not long. Some say we could potentially stay depressed, not necessarily in the $20's, but at some level, for extend periods.
OK, so no one really knows. But some on here, myself inclusive, are buying stable larger companies. What price point and why? I understand those buying all seemingly have very long time horizons. I do at least. I actually can't see myself selling a dividend paying oil stock unless there is some sort of technological advance that makes it a wise decision.
I'll start. I bought CVX at $77. The $77 didn't drive the purchase as admittedly I can't predict how far down it will go, or when it recovers. So I didn't expect $77 to be some magic entry point, and wasn't too concerned with this part. I picked CVX due to their discipline when times were good. Example a conservative dividend. Also because they have downstream operations. I have no additional exposure to BP. For a long term hold I'm not yet comfortable with their long tailed liability. I've stayed away from companies that are exclusively exploration and drilling. As much as I think downstream protects somewhat the downside in the current market, I missed pipeline companies etc. that would also benefit from this set of circumstances. I mostly don't understand them well enough, and that's reason enough for me to stay away. I obviously have exposure to a very risky oil exploration/driller in the small percentage I commit to speculation.
What are the buyers buying, and why are you buying it at whatever price level you're picking?
OK, so no one really knows. But some on here, myself inclusive, are buying stable larger companies. What price point and why? I understand those buying all seemingly have very long time horizons. I do at least. I actually can't see myself selling a dividend paying oil stock unless there is some sort of technological advance that makes it a wise decision.
I'll start. I bought CVX at $77. The $77 didn't drive the purchase as admittedly I can't predict how far down it will go, or when it recovers. So I didn't expect $77 to be some magic entry point, and wasn't too concerned with this part. I picked CVX due to their discipline when times were good. Example a conservative dividend. Also because they have downstream operations. I have no additional exposure to BP. For a long term hold I'm not yet comfortable with their long tailed liability. I've stayed away from companies that are exclusively exploration and drilling. As much as I think downstream protects somewhat the downside in the current market, I missed pipeline companies etc. that would also benefit from this set of circumstances. I mostly don't understand them well enough, and that's reason enough for me to stay away. I obviously have exposure to a very risky oil exploration/driller in the small percentage I commit to speculation.
What are the buyers buying, and why are you buying it at whatever price level you're picking?
Posted on 1/19/16 at 6:14 pm to Iowa Golfer
I guess I'll also add that I've read by some on here (and elsewhere) Russia is the target of OPEC. This seems reasonable to me based on what we actually know. Probably splitting hairs as I think OPEC, or certain OPEC producers, seem to think someplace in the $20's isn't good for them.
Posted on 1/19/16 at 6:15 pm to Iowa Golfer
Not buying but am holding XOM and will continue to
Posted on 1/19/16 at 8:21 pm to Iowa Golfer
Currently own CVX, XOM, and RDS for reasons mentioned in your post. I picked up some COP a year or so back, but I'm not as comfortable with them right now due to them no longer being integrated in times like this. However, I think they'll make it out of this downturn and be able to recover as one of the premier onshore focused operators.
Posted on 1/19/16 at 9:33 pm to Iowa Golfer
quote:
I guess I'll also add that I've read by some on here (and elsewhere) Russia is the target of OPEC. This seems reasonable to me based on what we actually know. Probably splitting hairs as I think OPEC, or certain OPEC producers, seem to think someplace in the $20's isn't good for them.
All production is the target, they are going to drive down production period. They do not really give a damn where it is.
The fact that both Russia and Iran are being hit hard is just icing on the cake.
The end story is if your cost basis is over $30/bbl you are a dead man walking, and the foot is not coming off the pedal until the zombies are in the grave.
Again JMHO
Posted on 1/19/16 at 10:25 pm to cave canem
the saudis have no f'ing idea what they are doing is my view.
Posted on 1/19/16 at 11:07 pm to jb4
quote:
the saudis have no f'ing idea what they are doing is my view.
I think they are the only ones that do, go back and read some of Ali Al Nami's comments back when crude was running up past $75, he predictions were spot on.
They were perhaps the only ones who saw this comming years ahead of time. Remember they did not cause this situation, Aramco production output has not risen very much percentage wise in decades.
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