Saudi's sent a strong signal to the market by cutting their prices today. An OPEC supply cut could make prices rebound strongly, but their meeting isn't until November 15.
Both US Crude and Gasoline inventories declined in the EIA report from yesterday but this has failed to slow the collapse in prices. This is being compounded by the general market selloff and the failure of ECB to come to the rescue with QE.
Besides the shocking declines in the E&P stocks I would also call attention to the drill ships. Both low and high quality drill ship companies are selling off as badly as the E&Ps or worse. Transocean is down by over a third since its July peak.
Higher quality Ensco is also dropping like a rock.
The oil majors have also pulled back by 10-20% off the highs.
I'm considering selling EOG, which is off by about 7% since I bought it only in August. This would leave me with only WLL left.
With an OPEC rescue off the table for a little while at least, and inventory declines doing nothing to arrest the strong downward trend in prices, one last hope could be a short term rebound in the dollar, which has been strengthening for months now. Lack of QE in europe might lead to mean-reversion for the dollar, and a weakening dollar is always supportive of oil prices. The dollar has strengthened from about $1.39 to the Euro in May to about $1.26 today, an incredibly big move.
Both US Crude and Gasoline inventories declined in the EIA report from yesterday but this has failed to slow the collapse in prices. This is being compounded by the general market selloff and the failure of ECB to come to the rescue with QE.
Besides the shocking declines in the E&P stocks I would also call attention to the drill ships. Both low and high quality drill ship companies are selling off as badly as the E&Ps or worse. Transocean is down by over a third since its July peak.
Always volatile low-quality drill ship company Transocean (of BP-Horizon fame) is now selling at 1/2 book value.
Schlumberger, the premium oil-service name has held up quite well, off only about 10% so far.
The oil majors have also pulled back by 10-20% off the highs.
I'm considering selling EOG, which is off by about 7% since I bought it only in August. This would leave me with only WLL left.
With an OPEC rescue off the table for a little while at least, and inventory declines doing nothing to arrest the strong downward trend in prices, one last hope could be a short term rebound in the dollar, which has been strengthening for months now. Lack of QE in europe might lead to mean-reversion for the dollar, and a weakening dollar is always supportive of oil prices. The dollar has strengthened from about $1.39 to the Euro in May to about $1.26 today, an incredibly big move.
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