There is so much panic selling going on in all markets, all commodities, all over the globe that it defies any one organization's efforts (like OPEC) to stop the tide from going out. I listened yesterday to two analyst conference calls with major Canadian oil companies -- Petro-Canada and EnCana -- and a third (Husky) two days earlier. None of them has any confidence in what's going on, or when it will end. While they all report spectacular Q3
earnings, they are all scaling down their CAPEX plans for 2009.
Petrocan and Suncor have both announced deferments for planned oil sands upgraders, EnCana is expected to chop its shale gas exploration budget in a month's time. All of which will set up the next meteoric rise in oil prices, maybe 12 months down the road.
The mistake we make over and over again on this stuff is during a spectacular spike, no one thinks it could ever go down; and during a spectacular slide, no one thinks it can ever go up again. Wonderful example of this: a year ago EnCana announced it would hedge 80% of its natural gas sales going forward, and at the time analysts were unanimous in their condemnation of this based on forecasts of continuing price rises. Yesterday EnCana announced a Q3
profit of $3.55 billion -- and $2 billion of that was directly attributable to their hedging decision.
Anyone have a good crystal ball out there?
Never let the facts get in the way of a good story.