Two Plus Two Older Archives  

Go Back   Two Plus Two Older Archives > Other Topics > The Stock Market

Thread Tools Display Modes
Old 05-12-2005, 12:45 AM
ACPlayer ACPlayer is offline
Senior Member
Join Date: Dec 2002
Location: Foxwoods, Atlantic City, NY, Boston
Posts: 1,089
Default Wher to for Oil?

The latest issue of Forbes has commentary from Steve Forbes suggesting that the price of oil is more likely to go to $30 than to go significantly higher.

Views? Investment thoughts?

I read somewhere that AMR might be a contrarian play if the price of oil heads down.
Reply With Quote
Old 05-12-2005, 02:31 PM
player24 player24 is offline
Senior Member
Join Date: Feb 2005
Posts: 190
Default Re: Wher to for Oil?

AC, AMR would most definitely be a major beneficiary of a large decline in oil prices. Fuel is the airlines second largest expense item (after labor). Airlines are having a difficult tiime raising prices to recover higher fuel costs, but I don't believe that a large drop in fuel costs would be fully passed through to the consumer - so airline margins will expand. Be careful with AMR and the other legacy air carriers - they have a labor cost disadvantage in relation to the newer carriers and they have a lot of debt. If you want to play lower oil prices, perhaps you should either make a direct play (short oil and/or oil producers) or make a diversified long play in airlines and other benifactors (like chemical producers).

Certainly, the demand for oil is cyclical, so a global economic slowdown would be bearish for oil prices. (But also bearish for airline load factors (i.e. capacity utilization). (To further complicate matters - lower oil prices would be somewhat stimulative to consumer demand (because gasoline prices would come down and give the consumer more disposable income)).

Many experts believe that the oil industry is operating near full capacity and that prices are destined to rise over time. I'm not sure what to think - Adios and others here are more knowledgeable on this topic.
Reply With Quote

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump

All times are GMT -4. The time now is 06:03 AM.

Powered by vBulletin® Version 3.8.11
Copyright ©2000 - 2021, vBulletin Solutions Inc.