Brent oil now in bear mode

[Palm]

Good time to plop a little more $$ down as markets continue down in steps.

[jft310]

The Junior oil and gas stocks all over the world are down way more than Brent. See the seeking alpha article,

[Putncalls]

I don't think this is the beginning of an oil glut like the 80s.

[sydbod]

Anybody want to take a stab at when and what price we will hit for oil?
Another crappy day on the Australian stock market with typically 3% drops in oil/gas shares. I don't even want to think what will happen when the US market opens.

[Palm]

Its a correction and a much needed one. Not a time to panic but put any idle cash into your overall portfolio and be happy when things bounce back to the upside. Oil could get to the $75-80 mark but the dollar has already started to drop and interest rates also dipping. Ladder cash in and be happy in the long run IMHO.

[jft310]

S and P futures down 6 points today. The Australian market reacted to the U.S. market yesterday .
Heck it's Oct this is when markets bottom . Historically by the end of Oct the recovery has begun, but Sept in aggregate has the worst track record . But bottoms occur usually in Oct, leg in cash is the right strategy . Agree Palmster.

[sydbod]

Jft, Palm, I am not so sure about your optimism.
I can well see oil prices dropping towards a low of $75 as a worst case, as you mention jft. That is another almost 20% drop .... a huge potential loss making situation for oil/gas shares. Take a number of years to recover from such a loss.
Although the US is looking reasonable, the Australian market has only one direction to go ..... downwards and some more downwards. Europe looking sicker, and China looking a bit stagnant also.
This side of the pond our main income (from mining) is getting the daylights knocked out of it. Coal and Iron Ore tanking big time. The 3 new QLD LPG plants coming online over the next year an a half look as if they will have a very hard birth period. There are no bright shoots here to provide any medium term hope.
At $85 I liquidated all the rest of my shares except for my Bank shares and will clear out of IOC also later when the market opens. I think I will sit it out until the oil prices stabilise, and keep around 50% cash for now.
I guess I now become a stateless member on this forum , not only by not having IOC shares, but also by no longer having OSH , STO or WPL shares.
You do realise that because of what I have now done, IOC PPS will shoot upwards through the roof. I hope you all will thank me for my sacrifice LOL.

[jft310]

S and P down less than 2 points at 8:40 certainly no panic in the market right now

[cybersssss]

Syd,

The Australian market generally follows the American markets in these large selloff and gain scenarios. Not being the cocky American, but it's just the way it is.

Cheers

[Palm]

Jft, Palm, I am not so sure about your optimism. I can well see oil prices dropping towards a low of $75 as a worst case, as you mention jft. That is another almost 20% drop .... a huge potential loss making situation for oil/gas shares. Take a number of years to recover from such a loss. Although the US is looking reasonable, the Australian market has only one direction to go ..... downwards and some more downwards. Europe looking sicker, and China looking a bit stagnant also. This side of the pond our main income (from mining) is getting the daylights knocked out of it. Coal and Iron Ore tanking big time. The 3 new QLD LPG plants coming online over the next year an a half look as if they will have a very hard birth period. There are no bright shoots here to provide any medium term hope. At $85 I liquidated all the rest of my shares except for my Bank shares and will clear out of IOC also later when the market opens. I think I will sit it out until the oil prices stabilise, and keep around 50% cash for now. I guess I now become a stateless member on this forum , not only by not having IOC shares, but also by no longer having OSH , STO or WPL shares. You do realise that because of what I have now done, IOC PPS will shoot upwards through the roof. I hope you all will thank me for my sacrifice LOL.

Sell low is the tough way to go, but you have to do what you have to do.  The O&G industry is going through a transformation, but I really don't believe it will take "years" for it to go back up and sstabilize.  The Saudis have increased production as well as a couple of other OPEC nations and that on top of a continued weak global economy and the increase in US production had to come to this result.  But as prices drop a little more some US exploration/production will be cut back due to lower margins, people and nations will use more fossil fuels and back will come the price.  We don't have the excesses in the markets we had back in 2007-2008 and inflation is more than tame.  Look back at 2011 and see the volatility and giration which was much more on a % basis.  It was a healthy correction and then things resumed.

As far as IOC goes, it will suffer with the rest of the industry but those high cost projects will suffer the most and be shelved.  Bonk's article on SA has probably been on the shelf for quite a while waiting for this kind of time in the markets so he can make the buy he has been waiting for.  He's said as much several times over the last several months.  He even said when making one buy that he had changed his tune because he had heard that the appraisal drilling was likely to prove up more resource and likely a 2-train project (or something close to that).  Bonk likes to stir the pot and agitate, then gets a good laugh when people respond.  Very smart guy but doesn't have all teh answers either. Even has said that this management team and BOD changes have been long overdue and good for the company.  Now he wants to whack them (some of it deserved), but again his purpose is to agitate and try to buy at a low point.  Smart investing.

I'll likely plop down more today into this weakness, and I don't think it will take "years" to pay off.  I'm just following Bonk's lead after all.