The gap has almost closed between DLS, BPT and STO since the...

The gap has almost closed between DLS, BPT and STO since the last oil capitulation in December last year.


I've got to say there does appear to be a bit of an agenda behind the falls we've seen in the DLS share price in the last few days over and above any convertible note delta-hedging that might be going on. There seems to be some purposeful efforts to sell this stock down.

What I can't understand is how the market has ignored the bottom made in the oil price and is murdering Australian energy stocks at the moment. To me these falls in energy companies look like some of the best buying opportunities presented by the ASX in a very long time. I'm going with whatever hidden agenda there is going on with DLS at the moment and buying in greater quantities and am also looking at SXY as a great opportunity, although I'm still leaving some powder dry in case the markets end up truly fried.

As I've said before I don't think the markets have priced in risk to the oil price and the Australian market is behaving totally irrationally by selling down its energy sector in this brutal way. They would be off better brutalising other sectors of the market like the banks as they have far less chance of quickly coming out of this particular commodity deflation cycle.

Saudi Arabia is at war with its neighbour Yemen in a proxy war with Iran. There are extremists who have created a caliphate in Iraq and Syria and are fighting on three fronts. Yemeni civilians are being killed on a daily basis by Saudi airstrikes launched from US sponsored platforms. These types of wars foster hatred and polarise people into acting for the purpose of vengeful retribution. It is not unlikely that the war in Yemen will escalates to include vengeful and destabilising attacks on Saudi Arabia a la Baghdad style of suicide bombings from insurgents sponsored by foreign vested interests. None of this is currently factored into the oil price as the commodities futures markets are corrupted by a system of fundamentalist financialization created by Wall St bankers. That same system has also created a central bank engineered shale oil energy bubble in the US that is predicated on risk free money created from a zero interest rate policy that has been in place for 80 months. The only reason that the US is now energy self sufficient is that the risk of borrowing money has been mispriced by all historical measures. This situation can't last forever as it doesn't work on a fundamental level, so one way or another the shale boom will be called out. The US will try and support the shale bubble by getting the oil price up to a level that sustains production by whatever means they know how, but ultimately over time this will also fail and the dynamics of energy supply and demand will be resorted to the most financially efficient means of production when the credit bubble bursts.

I can't see the oil price falling below last Mondays low again so I'm obviously at odds with the entire ASX energy sector at the moment. Well I'll back my own judgement and buy. This way I've only got one person to blame if it blows up in my face. Still loving this price action.

Eshmun