So who actualy walked-the-talk in this thread and bought OIL stocks?
This initial thread was launched with pretty good timing. Soon after this thread when oil fell below $42, it has climbed since off those lows.
Oil stocks are up 15% to 35% off that low, just in the last week. Good gains! PBR has been a big winner so far, up 35%.
The Million Dollar question is: “Will OPEC drive oil prices from here up above $50/bbl, or $75/bbl and manage to keep oil at those prices or above?”
Or will continued demand-destruction overpower the cuts in supply, sending oil even LOWER, despite OPEC’s planned cuts?
My view is that those who have been burned are those who UNDERESTIMATED how bad this economic downturn will get.
I’m inclined to think oil will move up (on anticipation) ahead of the OPEC cut and then after the cut it will sell off again, because even another 2 Million bbl/day production cut won’t save oil from this continued demand destruction.
There is another temporary demand side effect that won’t last.
Big Players have been lately buying oil at $43/bbl and filling up supertankers, and then PARKING those supertankers in port to wait and much later unload to fill oil futures contracts later at higher prices. This story has been covered on CNBC and others in last 24 hours. This speculative buying involved many millions of bbls of oil, to fill up countless supertankers used as floating warehouses.
And people have also talked about a potential supply-side risk: cheating of OPEC members whose government budgets are in big trouble if they reduce output per OPEC quotas (given their oil revenues already way down with price having falling to $43/bbl). So lots of talk of actual world oil supply not pulling back in lock step with OPEC agreed production cuts.
