Normally. a cut in production by OPEC would signal higher crude oil futures prices because that group of countries constitute the largest sources of oil in the world. Yesterday, after OPEC announced a cut in production the price of crude turned up.
When crude futures go up, the oil related group of stocks generally move up in unison. That was the case yesterday for most of them. They move like a herd of cattle! So, such an upward move in crude usually helps MIND.
The problem is that the Bush Administration is trying to force the price of gasoline at the pump and home energy costs down in hopes of winning voter approval for the Republicans in the November Congressional Election. It has worked for them lately. Look at how much gasoline prices have dropped in recent weeks and months!
The Department of Energy, no doubt at the direction of Carl Rove, keeps cooking the numbers by announcing that inventory numbers keep increasing. Being the largest consumer of crude oil in the world, at 25% of the total world consumption, such announcements pressure oil futures down. So, despite the reduction in production by OPEC, as long as the Energy Department continues announcing higher inventory numbers, crude probably go up much from current levels. I hope I am wrong, but time will tell!
You're absolutely right: the memos flying around the Republican offices for months has been that they need to find a way, by hook or by crook (mostly by crook) to lower gas prices before the election. The numbers lack credibility.
As can be easily discerned, this is exactly what is going on. It's all about the coming election and Carl Rove and his "ilk" attempting to sway voters by temporarily reducing the price of gasoline at the pump and home energy costs. How people fail to see this is beyond me! However, regardless of what is done or said by that bunch of con- artists, the Republicans are going to get creamed in the election. I'm not a Democrat, but rather an Independent who is sick of seeing the people of this country manipulated with words and actions that are leading us down a road to ruin. I don't know what a change in leadership in Washington to the Democrats can do, but it's worth the risk. All I hear and see out of the Bush White House is hate and scare tactics. It's heartbreaking to read the casualty reports from Iraq and think about our troops who face death and injury each day and the anxiety of their families back home. And to think that this bunch will be in the White House for two more years! It's a tragedy!
John Dean had it right when he said that what the Bush-Cheney Administration has gotten away with so far is worse than Watergate. Fortunately, more and more people are beginning to realize this.
As for Mitcham Industries, it is is a fine young growth company with a terrific return on investment. But like the rest of the energy sector, our stock has been pounded as if the industry is passe! Just proves that the stock market is not a "weighing" machine, where value determines price, but rather a "voting" machine where emotion carries more weight at times than reason.
A turn upward in crude oil prices is likely in the weeks ahead. Regarless of what the spin doctors say, world demand for crude oil continues to exceed supply. That means only one thing, that the intermediate and longer term trend in the price of crude oil will resume its upward direction.
I still believe that energy services is a good place to invest; however, precious metals (gold and silver) should prove to an excellent hedge against the international monetary and fiscal challenges that appear to lie ahead!