What happens if oil does bottom here? Just like at $50, it seems like there is universal opinion in one direction. Then it was up. Now it is down.
I know that investing in irony is a sucker's bet, but it is compelling to watch Exxon (XOM) , the strongest in the group, finally get crushed. You have to ask, could that be the bottom?
Listening to most of the analysts who are on, I get the sense they think the slide is just beginning, even as it is down 20% in a heartbeat. They are basing it on the current glut.
But Schlumberger (SLB) , which called the downturn and was the first to have mass layoffs soon after the peak, called the bottom this quarter based on a pretty unassailable thesis: the tremendous decline in capital expenditures, like that of Exxon, which cut capex by 38%. That's a lot of money not to spend and it's a sign that production's going to drop pretty soon. (Schlumberger is part of TheStreet's Action Alerts PLUS portfolio.)
Those who say Schlumberger isn't taking into account Iran or the missing global barrels, the ones that aren't being counted -- the Morgan Stanley thesis -- seem to think SLB wouldn't know these kinds of stats. But you really can't bring out big oil without SLB. Fact of life. Its tentacles are in every place in the world. The technology is proprietary and everyone from Iran to the outcasts in Venezuela (who have been cut off for non-payment) knows it.
The glitch in SLB's theory has to do with possible demand-side weakness but, as much as I am concerned to see the Baltic Freight go down pretty relentlessly here, I am not willing to call a top in demand.
I would rather call a bottom based on supply.
As I mentioned, resilience is the watchword: Look at Chevron (CVX) , look at Schlumberger.
Those are statements.
