Reply to: Black gold

[MarillionFan]

And we're up. Which is surprising based on China drop overnight, but hey ho. None of my targeted shares low enough yet.

[SantaClaus]

[BlasterBates]

Upstreaming earnings at Shell have crashed. If Shell only had upstream activities it would have gone bankrupt. i.e. earnings 80% down, however earnings on it's downstream activities have soared, this means instead making a loss, they're simply making "slightly less profit" than last year.

If oil were to stay down for the longterm, it's clear they'll just expand their downstream activities.

It's just simply an undervalued company

[LondonManc]

I think 40 is going to be the new high. Saudis pumping in more to keep prices low and bankrupt new US shale companies, with low output from China, hence low usage.

I think it's an add though but I don't see it moving for a few years and then not back to the 600s

US not hurting as much as expected on this - Colombia are really suffering.

[eek]

It's a bloodbath in the Upstream industry at the moment.

ClientCos are only interested in cost-cutting right now, so even the few gigs available are at rates 20-40% lower than 12 months ago. Many of the permies who've been laid off are looking for stop-gap contracts as well as perm roles, which is pushing rates down even further.

Even if the price does bounce up in the near future (which no-one I speak to inside the industry believes will happen,) the ClientCos are using this as an excuse to push rates to the bottom.

Other than that, everything is rosy

Yep its utterly unpleasant and there isn't a solution in site (Saudi want money at any price, the shale gas providers may as well continue producing for the same reasons). The North Sea is an expensive place to produce oil so no option is pleasant and all anyone can do is cut costs to the absolute bone...

[Tensai]

A mate of mine on contract with KBR (oil and gas) got his one week notice today. He's got his fingers crossed the oil price bounces back pretty soon, otherwise his wife's gonna be all over him (in more ways than one).

It's a bloodbath in the Upstream industry at the moment.

ClientCos are only interested in cost-cutting right now, so even the few gigs available are at rates 20-40% lower than 12 months ago. Many of the permies who've been laid off are looking for stop-gap contracts as well as perm roles, which is pushing rates down even further.

Even if the price does bounce up in the near future (which no-one I speak to inside the industry believes will happen,) the ClientCos are using this as an excuse to push rates to the bottom.

Other than that, everything is rosy

[BlasterBates]

Or maybe $45, and then you've missed the boat.

You see this is the point you can't call the bottom. So what you do is you buy tranches.

When the stock market goes down 10-20% you buy, often it pops back up again, if it drops a further 10-20% you buy more etc.

That's how you make money on the stock market.

You don't sit there waiting for a crash, otherwise you might end up feeling very frustrated waiting 10 years for the crash to arrive, and in the meantime your cash has been erroded.

Basically you stay invested all the time but profit take in the good times and buy in the bad times.

[PurpleGorilla]

I think we will see $35 maybe even $30. Not a time to buy oil shares IMHO.

[BlasterBates]

The longterm oil consumption trend is still up.

Short-Term Energy Outlook - U.S. Energy Information Administration (EIA)

But production is up further, with exploration budgets being slashed it's only matter of time before there will be a deficit.

This is an almost certainty

One thing I have learned is there are no "new paradigms". i.e. the stock market is up it will stay up or the oil price is high it will stay high. Oil is cyclical, the price goes up everyone piles in produces more and more oil, the price goes down exploration gets slashed.

I would only see a problem if something came along to replace oil. But I haven't see that. Man has been burning oil since the ancient Egyptians and it aint going to change.

[MarillionFan]

But that's the point, that's priced in. At $80 a barrel they should be worth double their current price.. At current oil prices they're a good buy, they're still making a profit. Sure maybe oil will drop a bit further but I really don't see much of a big downside, If the oil price goes up, you make a killing.

I think 40 is going to be the new high. Saudis pumping in more to keep prices low and bankrupt new US shale companies, with low output from China, hence low usage.

I think it's an add though but I don't see it moving for a few years and then not back to the 600s

[BlasterBates]

Not sure I agree on the oil/energy producers. Just because the price is low does not mean a bounce back. Maybe the days of big profits in the oil industry are over.

But that's the point, that's priced in. At $80 a barrel they should be worth double their current price.. At current oil prices they're a good buy, they're still making a profit. Sure maybe oil will drop a bit further but I really don't see much of a big downside, If the oil price goes up, you make a killing.

[DimPrawn]

The point is that BP and Shell are good buys.For example BP is below it's price 10 years ago. There are other shares that are due for a correction.


Even if it goes down, it will bounce back very strongly and very quickly.

Not sure I agree on the oil/energy producers. Just because the price is low does not mean a bounce back. Maybe the days of big profits in the oil industry are over.

[BlasterBates]

The point is that BP and Shell are good buys.For example BP is below it's price 10 years ago. There are other shares that are due for a correction.


Even if it goes down, it will bounce back very strongly and very quickly.

[DimPrawn]

I agre. Too early to tell. But worth getting funds available.
I think a good long slide is on the way. I've got 300k cash to play with this time, I've moved 7 in so far.

Las time I called the bottom and bought in with 50k but sold on the rally really early making 20k. If I'd waited it would have been 200k. The weakness in commodities is very telling.

This is the problem with investing. You tend to hang on to losers for years (hoping for the eternal turn around) and take profits in a few weeks, cutting the profits way too early, and missing out on the meat of the move. Timing the best time to sell is bloody hard (unless you have insider knowledge).

[MarillionFan]

You are far too eager to jump in. Takes weeks to see the long term trend and have any hope of buying at or near the bottom.

We've had years of QE inflated asset boom, you think the bottom is here a few days after the first slide?

I agre. Too early to tell. But worth getting funds available.
I think a good long slide is on the way. I've got 300k cash to play with this time, I've moved 7 in so far.

Las time I called the bottom and bought in with 50k but sold on the rally really early making 20k. If I'd waited it would have been 200k. The weakness in commodities is very telling.