03-31-2020, 05:42 PM
(03-31-2020, 05:36 PM)fenders53 Wrote:(03-31-2020, 05:18 PM)Otter Wrote:It's the perfect oil storm. I fail to see what oil +10% does for any US oil producer. If you are just trading the commodity then yes up 10% is good. Up 30% will still bury US producers. Majors are cutting Divs if up only 30% lasts. Up 100% from here and all is well.(03-31-2020, 04:58 PM)fenders53 Wrote: The key words is LEAPS. Long-term plays should work out. Oil can't get too much cheaper. Oil stocks can. Some Canadian oil is sub $10. That's unfathomable. None of the brilliant oil authors called this. Not even close. Majors have been investing CAPEX just months ago. If anyone should know it would surely be XOM,CVX,BP etc. Watching them scramble to cancel now.
Yes. This was a black swan event, and so not predicted by analysts or those doing CAPEX planning before the virus broke out, and understandably so.
I think the crude market is doing a pretty good job at the moment of pricing in the near-standstill in industry and commerce - better than the equities market. Their commodity is pricing according to reality. Next 30 days or so is the worst of this for America, Europe is 2 weeks ahead of us generally (and should start slowly putting itself back together sooner), and China is desperately trying to bring itself back online without experiencing a second wave of infections. Even a rumor could send crude up 10% at this point. Actual good news could see WTI head up 40% or more.
Agreed. Even among the majors, their free cash flow wasn't sufficient to satisfy dividend obligations before all of this happened, when crude was $50+. They need a 150% gain in the underlying commodity price just to get back to playing unsustainable financial engineering with debt and buybacks. That's why I'm not investing in the companies, just betting that WTI rebounds from $20.