That's a big call goldbear77 I'm not sure about STO as I don't...

That's a big call goldbear77

I'm not sure about STO as I don't hold or follow them but your logic doesn't apply to some of the stocks with good fundamentals and with P/Es of sub 5 I would imagine with the current falls in the SP.

No one forecast this malaise and for the very same reasons that the prices have tumbled they can go straight back up again. It happened with the Aussie dollar around 2008/9 where it went back into the 60's and then rebounded to $1.10. Only recently the O&G sector was being called to go higher by the smart end of town - did they see it coming? That is to say no one saw that the Saudis would hold out on production cuts which would see the oil price plummet as it has done. And I'm not talking about the predictions/possible scenarios in the last few weeks - any 5 year old could have done that.

Oil has gone down because of inter alia a perceived glut and to a lesser extent slow economic growth. That glut was caused by high oil prices and companies (with the help of bank loans) chasing risk and profits.

Well how is that working out now?????????

It would seem that the banks and the Americans have not learnt any lessons from their recent past. They just got bailed out of the mess they caused in housing and have now started a new waive of unscrupulous lending with companies that were making all sorts of unrealistic assumptions. Yes oil production has gone up but like anything else such as housing, smart phones or widgets, if there is too much of the stuff prices will fall.

The kicker in all this is that oil companies are leveraged up to the hilt and the banks will want their money back and depending how they packaged all this up who knows what the consequence will be. We will probably never know as there is no real transparency. As these wells go offline - their time in the sun is short anyway - the supply problems will start to balance out and ease and oil will go back up.

How long that will take who knows.

Obviously OPEC, namely the Saudis, are playing a waiting game. It will be interesting to see how this plays out in the US (not to mention the various sovereign income needs) and, moreover, what the implications will be for the banks who have made all these loans. These will be the same banks who are now calling for $60 $50 oil - the Goldman Sachs of the world. My guess is that the banks, who made the loans and are now calling for the lower prices, most likely sold their debt off a long time ago. It's fantastic isn't it.

What is really prevalent though now is how everyone is so smart and smug after the fact.

This current situation would not have happened without leverage and now it's coming back to bite us all.

This, in time, will pass. There will be a lot of naval gazing and a lot of I told you so in the meantime. For those with a long term view you need hold your nerve.

The world needs to grow, the energy revolution is still some time off and oil and gas is still needed.

Enjoy the ride.

Cheers
BW
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Signifying nothing.