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awallejr (80.15)

Oill over $147 again?

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5

June 06, 2009 – Comments (4) | RELATED TICKERS: BP , ATPAQ

Here's an interesting link:

http://aol.smartmoney.com/bn/on/?story=ON-20090605-000595-0650

I wouldn't jump off the energy bandwagon just yet. While you always run the risk of profit taking, that also means there are profits to have been made.  While I don't expect $147 oil anytime soon, the trend over the years still is up.

 

4 Comments – Post Your Own

#1) On June 06, 2009 at 4:03 AM, TMFUltraLong (99.96) wrote:

Everyone of late has been dumping on the refiners. They are issuing more shares, bringing down profit estimates sometimes into loss territory, and getting downgraded on a valuation basis... yup... I'm starting to really like those refiners =) More to come....

 UltraLong

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#2) On June 06, 2009 at 11:55 AM, ralphmachio (24.60) wrote:

I don't think our economy could take it. I have a difficult time imagining a large run up without some war, or rumor of war. I just sold my DXO position I bought at 1.85, because I think we may have a small pullback. 

Oil investment can cover inflation, and the threat of conflict in oil region, which may be a good hedge against the market in general, which might suffer. 

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#3) On June 06, 2009 at 1:42 PM, StopLaughing (< 20) wrote:

Oil and quasi currencies will go up as the $ and other paper currencies go down. From time to time governments will rally the currencies to finance thier debt but the policy world wide is one of weak currency. inflation and deficits (at least in the short run).

China is going to try to export it's way out of the  depression. In the short run they are stock piling gold, iron and other commodities. Are they stock piling oil? When they get enough commodities stock piled (before they rise in price) they will benefit if the world economy does recover. 

However, there is another angle they can play. They can switch to a more internal economy.

After all of the stock piling of quasi currencies they can then start selling T-Bonds. That will kick up the interest rates and kill the American recovery. It will cost China as the price of the T-Bonds drop, BUT every $ they lose on the collapse of the $ will be more than offset by the money they make on the stock piled quasi currencies. They can of course also take positions in various derivatives.

Why would the Chinese do this. They, the Russians and the Europeans want to replace the $ as the world currency to diminish the power of the US. They can all act in concert to dethrone the $. But they need the right timing and conditions. They can hedge so that they do not lose when they do it. Russia has oil and Europe has an alternative currency which are built in hedges. 

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#4) On June 06, 2009 at 11:29 PM, ChrisGraley (31.89) wrote:

Ultralong- I really wish you luck with that.

There are 4 types of stocks that I swore long ago that I won't invest in, in real life.

#1 was American car companies, but I can see an investment in Ford later.

#2 was airlines. I was tempted by Southwest a while ago, bt never took the plunge.

#3 was the refineries. I can't peg a reason why these guys suck so bad most of the times. High oil or low oil doesn't seem to make a difference. They just seem to be on the wrong end of every deal, which is what I think the big oil companies planned.

#4 is bio-stocks. I'm just getting too freakin old to be spending 100% of my time in front of the TV watching CNBC for a tidbit of bio-stock news.

The rest of the posters here should read between the lines.

We have an American oil company talking to Russian oil companies. Who's interest does the American company have in mind?

What are we trying to do? We're trying to increase their costs! A ton of Russia's economy is dependant on their oil. Putin confiscated the oil business and is using it to fund major social programs. The problem is that he has syphoned off enough money that the oil industry has not had the money to spend to invest in the future. We know that and they know that!  Now BP is thinking (and probably correctly) that they haven't spent money on key advisors to predict oil's future, and even if they did, the structure in place has not been there long enough for Russia's politicians to trust them.

What are we warning about? If they don't invest enough money, oil may hit $200 a barrell! Do you think that russian oil companies think $200 oil is a good thing or a bad thing? What we are really trying to tell them is that they are gonna miss the boat because everyone else is planning for higher oil and they haven't spent anything. We do this because we want their costs to be higher. BP can compete better globally if there are higher global costs. If Russia bites, it might be a good inflationary play, but I don't think they'll bite.

Nothing further to see here, please move along.

 

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