You cannot go long on oil here. But I also think it's impossible to be short. What that leaves us with, as we're trying to trade and invest in the energy space, is more than a bit of a conundrum.
The OPEC meeting's outcome was no surprise to anyone – all the ink being spilled on the 'end of the cartel' or other such nonsense is just that.
The Saudis have had a plan. They're out to destroy non-OPEC production and regain control of the global marketplace. They've been following that plan for the last year, and gotten little in the way of help from other OPEC members, or destruction in production elsewhere – so far.
So they ratchet up the pressure. What, $45 a barrel isn't low enough to force 20 large cap US and Canadian E+P's into major restructuring? How does $35 strike you then? Are some of your ready to cry 'Uncle' yet?
That's what's been going on with oil stocks in the last week, since the meeting's outcome last Friday.
Oil company shareholders are realizing this 'ain't no game' and that prices are going to stay low for as long as it takes to shake out some of the weakies.
To use the parlance of the day - “Stuff” just got real.
A great parallel I got this week was from my friend Paul Siluch at Raymond James in Canada – where they dealing with their own serious stresses in the oil patch.
He draws a comparison from the tech bubble in 2000 and charts the movement of Cisco (one of the survivors of…