Woodside shares have been in a bull run since march this year as the global economy continues to strengthen. It also marked a period where investors have felt more confident about Australian economy and US. With global demand for oil improving we have seen the price increase with little resistance as trade war fears have been brushed off. This is not to say that it cant derail the stock but for the most part investors have shown little concern and believe that both China and US governments will resolve this Tit for tat dispute.
With that said there has been little appetite from Oil producers to increase production however, they will be careful not to let the price rise too high that it would disrupt the Global economy and its recovery from the GFC effects. For this reason i believe there is still some way yet for the stock to rise, but i am also cautious about potential short sellers and investors taking profits in the comming weeks that may bring some downward pressure on the stock.
Thanks for reading !. ( my first post ).
Cheers Nav.
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In the last two weeks we have seen market volatility as US investors mull over determine US Fed hiking rates and increased political uncertainties globally. Overall it is important to focus that he world is now entering a new business cycle that looks promising. I reaffirm guidance for $42 for woodside stocks. Good buying opportunity
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Sharp falls, now is a good entry point.
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Markets have rebounded. Trade tensions talks set for first quarter. Market sentiment may have changed with four days of market gains. Is this a turning point? Woodside shares on track to $39.
I don't think producers will be able to completely manipulate a ceiling on the price once US inflation gets out of control within the coming months/years.
Bipolar_trader
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@Blacklodge, if inflation in the US rises too quickly it wont be good for their economy as Oil adds alot to inflation. It would likely be met with the US add supply of oil into the market and I would think that OPEC would have an interest in a strong US economy moving forward as it has such a large influence on global economics through network effects (if i can say that).
Blacklodge
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@NaviCoin, Good points. I think it'll depend on fed policy in the face of stagflation. If they aggressively raise rates to curb inflation, then prices might be curtailed, but shale companies might be in trouble if they do because they are apparently very laden with debt and therefore may potentially go bankrupt. If this is the case, then OPEC needs to pick up the slack, and I thought I read somewhere when talking about Venezuela/Iran that while they have the massive reserves, their ability to ramp up output significantly might be hampered by major production bottlenecks, in which case prices would continue to rise. In any case, if the price is high enough, shale production might cover the cost of the increased debt. If on the other hand the fed decides to cut rates again during the next crash and do another round of QE, I think the rate of the collapsing dollar (which won't be saved this time by foreign countries as they are getting out of treasuries because they now realise that having USD as the reserve currency is a mistake), will outstrip any production increase, and prices will spike.
Bipolar_trader
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@Blacklodge, Interesting points. thanks for taking the time to discuss. I will revisit this idea again in the next two months and see what happens.... In terms of crash, I have read that crisis generally occurs every 8 years and it has been 10 years since the GFC. Stocks are now back to their GFC levels and I can only guess it has some more bull run to go before we see some serious wobbles, maybe this will be forced by the sudden rise of interest rates.