All markets have some manipulation. I saw them often in the electricity markets I used to trade. You cannot move crude from 110 to 57 on pure manipulation alone. And keep in mind a lot of the move down is margin calls and guys having to get out .Some hedge funds undoubtedly shorted into this. The final move down to $30-40 is possible and would be an under-pricing. That is the nature of markets made up of humans with fear, greed, and leverage. They tend to overshoot on both the up and downside. But don't tell me that every single move was a few banks moving the price based on zero fundamentals. That is far more ridiculous as a notion. Nobody is bigger than the market and will eventually be crushed if they try to move something where its not supposed to be.
OPEC is a joke now and too small to control things. If you think any one trader is big enough to manipulate crude oil you are crazy. The market is far too large to move just because a few players want it to.
Can you explain how a Russian collapse will hurt economies of other countries? I suppose some countries own bonds/investments in Russia. But the Russian economy is very small compared to the rest of the world. It also exports nothing but crude oil and natural gas which we can always get, right? What do we need from Russia?
There is no conspiracy here. It is just another commodity cycle. Crude oil was high, so technology and production answered the call. All new incremental global crude oil production was from US Shale. There was some from Libya Iraq etc.
They produced too much oil, now there is a glut. Drilling has slowed and will eventually stop. This will lead to a rebound. When oil rebounds to 80 or so, you will see new US production come online again. Going forward as global conventional production declines, the US will leap ahead even further as a global producer and even start exporting.
Russia is now in complete crisis mode which is why you are seeing old correlations get out of whack.
In terms of breakeven, you are right. The Bakken is 65-70. The Eagle Ford is supposedly lower at 50-60. People do indeed need a profit to drill which is why 80 is probably a reasonable global equilibrium price.
With the current administration 100% anti-coal you really think they won't let this thing go under?
We can start sifting through various metrics. I still stand by my previous assertion that the only thing that really matters is if the coal market recovers and when. I think the stock performance is telling you something.
This company would be in the 95th percentile compared to all large cap stocks in terms of risk. Either the coal market recovers and you make a killing, or it doesn't recover fast enough and this stock goes to zero. Take your pick. Flip a coin.
Peabody is the undisputed market leader in coal. I am not taking issue with that. Operational expertise is to be commended as well as strides in efficiency and safety.
Growing market share and coal production during a massive coal oversupply is EXTREMELY RISKY. The company will be well positioned IF the market recovers. If the market does not recover in time, the company will go bankrupt. This company cannot sit here and take massive quarterly losses forever. Surely you see the riskiness of this play. Just because it is the best in class player, does not mean that it cannot go bankrupt. I am staring at 12 quarters of large losses; that is not some short term anomaly you can scoff at.
I think it is prudent that you disclose that this company is a huge speculative risk. Some people are willing to take that risk and it may pay off huge. But I think some people are being mislead and told that the risk is low and that is not right.
I don't understand how you call a company thriving when it is losing money.
I am guessing take-over talk. If I were EOG or a major I would just wait for the bankruptcies to roll in and buy everything pennies on the dollar. I would think at this point CLR or WLL would be a more attractive target since they have a much lower breakeven price on crude oil and core land.
No, I think the WSJ article today was better. I think we have entered a new era; I have been incorrect on my view of crude oil. I thought we would never go below 80, and we did. OPEC is no longer big enough to manipulate crude oil like it once did. The economics and technology have once again helped the world out right when we needed it to. I think the new equilibrium oil price after we get through this bust is probably in the 70-80 range, not the 80-100+ range I was thinking. Many of the small players such as Triangle can't meet their required returns with oil below 80.
A lot of companies are going to go bankrupt and hopefully the collapse in junk bonds will not cause too much damage outside the sector. Unfortunately this black gold rush is probably over for the next 10 years or even longer in my opinion. Companies will have to be content with a reasonable rate of return with a more modestly priced crue oil curve. Time to find the next big thing.
Keep in mind oil is such a huge market that it would be difficult for any one player to manipulate it. OPEC has basically thrown in the towel. That should tell you something.
All the bulls leave when the stocks get crushed. Dram was a smart guy, Marv was more of a windbag. Id have a cigar with either of them. The reality is, picking stocks is a loser game akin to the casino.
Lol. You guys have no clue how markets work. Where do I even begin? A stock price is nothing but the collective opinion of all the players who own or short it. I guarantee you most of the volume the last month has been longs getting out.
You do realize a market would not function without buyers and sellers? Nobody complains about shorts when they are getting squeezed out on the way up.