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Black Friday... Huge "sale"... Oil Shale Stocks

Anything related to investing, including crypto

MJ DeMarco

I followed the science; all I found was money.
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Not sure if anyone here follows market gyrations but I do.

http://www.marketwatch.com/story/10-us-shale-oil-stocks-getting-crushed-the-most-today-2014-11-28

The decision by OPEC on Thursday not to cut oil production, despite a price decline of over 30% since June, means U.S. shale-oil producers may soon find business to be unprofitable.

Today marks Black Friday for a lot of oil shale stocks, most of them getting hit to the tune of a 20-30% clip today. OPEC has decided to keep production at current levels and the weight of the decision must be bore by American companies. This serves to pressure US based companies to suffer the price declines, moreso than OPEC. OPEC is the bear in the river, the US companies are the salmon. In fact, many of these companies cannot survive if oil continues to move lower since their operations are based on a minimum priced level for the commodity.

Some questions to ponder...

1) How low will oil go?
2) Do you think these stocks, now at huge discounts, are worth a mid-to-long term buy?
 
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Jake

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1) -10% more max. But probably not much lower than it is right now.
2) Probably but I won't take the bet. Not enough reward for the risk.. if Saudi decides to put everyone out of business. Would have to go over financials though.

My take is that Saudi / the U.S are trying to apply pressure to Russia / Iran and they're willing to hammer U.S companies in the process.
 
G

Guest3722A

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1) How low will oil go?
2) Do you think these stocks, now at huge discounts, are worth a mid-to-long term buy?
If I had to guess, the yearly trendline in the CL is sitting at around 60ish. Seeing that it is dropping fast and now at 67ish, to speculate, I would say by the end of November or December it has a solid chance of making it to that $60 range.

If it does, I would then want to see if it sits right on that line, or if it sloppily sits close to that line. If it sits right on that line, imo, the chances for a psychological based bounce would be pretty good.
 
G

GuestUser112

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How many of these companies own refineries?

From what I understand, Alberta has a gigantic supply of oil shale, and production is still going strong, yet we in Canada lack refineries, so we ship a lot of it to USA. So I would guess that even if an oil company cannot make money selling it's own shale, it can still make money refining Canadian oil shale, which is relatively cheap as far as I know. Of course that's pure speculation, but I think it warrants looking into by somebody looking to invest. If the company can still make money, it should survive. If any of those companies own refineries, pipelines, etc. than their intrinsic value stretches beyond oil production and so this market valuation might be way off.

From the outside, anyway, this looks exactly like something that Warren Buffet would JUMP on. Lot's of unskilled investors will probably get scared and start selling these American stocks now, so the price will probably continue to drop. And it seems to me that unless OPEC keeps production high for a long period (5 + years), those stocks ARE going to go back up. Which is a dubious concept, as civil unrest in the Middle East is at an all time high, which might even affect production and/or transport if things continue to heat up. At least it could affect relationships within OPEC (1975 Hostage Incident, for example) - all of which makes it uncertain that they could maintain production during a price drop over a long period of time.

Some big investors might even just wait a while and see, and then drop out later, so there's the prospect of selling short in 6 months time or so.

And then, there's the prospect that the Chinese could get involved and loan some more money for bailouts...who knows?

On the flip side, how does a drop in oil prices affect other investment opportunities? Transportation costs are going down, for one, which means larger profits for transportation companies. I think this is one that might make money for some on BOTH sides of the coin. Here's another article:

http://www.marketwatch.com/story/us-stocks-energy-firms-slammed-after-opec-agreement-2014-11-28
 
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D

DeletedUser394

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I don't try to time the market, because I'm usually wrong.

My equities are heavily skewed towards resource/commodity based stocks, so needless to say it was a rough week!

First thing Monday morning I'm putting in a new buy order.

These low prices are not sustainable for many producers so it'll have to rise again eventually. Within a year.

It was funny to see certain natural gas players take a hit even when they have no oil plays to speak of.

also, f*** OPEC :)
 

jake1720

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It's going to go back up. The market is cyclical. If there's one industry I know it's Oil (Half my family is in it, including me.)

Great buy soon.
 

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