Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Hi Boyo,
I have made this comment before and I make it again in relation to your 08.59 post this morning.
Given Gs resilience to the declining OP and the fact that the SP v OP ratio has now remained 'overstretched' for a number of weeks, I belive it is now reasonable to conclude that other factors are accounting for an 'adjustment in the long held 3:1 realtionship of SP v OP.
I would suggest that this is due to some of the following fators:
1. Nearly £400m in Cash to insulate against the weakness in OP which should enable G to 'ride the storm' for a couple of years.
2. Retention of Dividend
3. Imminent increase in production from Satra
4.Clarity in KRG payments going forward, all be they somewhat reduced - It's still a gesture and a contribution to costs.
5. Director purchases
In view of this, I dare to suggest that the SP v OP ratio is now around 4+
Thoughts?
Jack
I'm grateful to Marfthew for adding his comments. Following his observation about the unreality of the S&P being at the same level as this time last year - which is broadly correct - I thought it would be useful to show how the S&P, FTSE, RDS and G have tracked over that time and how they stand at this stage of the crisis.
https://invst.ly/qj80d
Thanks for that - noted - I'm off to put my head back in the kids sandpit
Yes and that’s the problem, the market isn’t reflecting anything that’s going on at the minute.
I sell barrels of oil but the price of that barrel of oil I can get next month and the month after doesn’t matter, yeah okay.
Same with the S&P, hey we’re at the same level as this time last year, yes that’s right the same level, erm the World has stopped for 2mths months, but hey we don’t see that as a problem, same level as this time last year when everything was great.
The markets will wake up soon enough. This putting your head under the covers and ignoring everything going on can only last so long.
I’m not short on anything, I will buy as close to a true bottom as I can. IMO that bottom is a long way off. The pain from this is going to roll and roll. Wait to the banks start feeling the pinch, which they will soon. Defaults are going to be coming at them from all directions
WTI front month Contract roll-over v Brent (LCO) v Oil co sps since Friday's close in the UK: https://invst.ly/qj5v8
Agreed bunks - there is the technical issue of futures contracts - which is largely caused because physical delivery must be avoided - and the small matter of selling the actual commodity to a refiner. Oil stored within a VLCC is unlikely to remain moored off the US (WTI) market if it can be sold in Europe (Brent) for a net profit, so any underlying differential between WTI and Brent eventually narrows to reflect shipping costs as the oil will be sent to wherever there is a buyer. Ultimately, if WTI 'spot' falls then Brent will follow and the excess of supply will not be confined to the US.
Try this site for prices..
https://tradingeconomics.com/
Market isn't seeing o.p as a real position, just a temporary engineered situation imo - certainly not proportionally reflected in equities
A $2+ drop in Brent overnight isn't going to assist the sp, where the relationship was already stretched....
It’s difficult to comment on today’s sp performance without appearing to either ramp or deramp.
It could easily be argued that the resilience demonstrated by G’s sp today is inconsistent with it’s past performance v OP and also in relation to the manifest geopolitical and global economic risks to which it is exposed. On the contra side of that, we have well founded ‘fundamentals’ concerning G’s ability to survive the current crisis and to ‘come good’ in the post C-19 environment.
One thing is for sure, if the sp is ‘fragile’ then today certainly tested that.
Here’s an hourly chart that tracks performance against OP and RDS since G bottomed out at 53p a few weeks back: https://invst.ly/qiw22
Would I be shorting/selling G at this point? Not really, especially - as others have pointed out - with potentially easier pickings elsewhere.
Yes boyo I did as I read it again ...
ATB
A good performance by G today, just ahead of RDS and the KRI companies since Friday's close:
https://invst.ly/qibht
I think you misunderstood my earlier post in another thread, Hasiba- I was referring to 'bottom' of around $98 - it was not today's target. As I suggested, G seems to have levelled off and stepped off the 'down' trend:
https://invst.ly/qibfp
Brent started to flatten out on Thursday and G followed a day later, possibly breaking out of last week's downward trend today: https://invst.ly/qi41c
Good news bunks...
The US are lifting some restrictions in states with little or no CV19 infections
I'm also looking for a "double bottom" on Brent circa $25/brl
US virus data is the key to a rebound and they're a few weeks behing us I think.
Last night, they were saying on CNN "Situation Room" that whilst Trump & Co want to open the economy, firms are reluctant until thier workforces can be tested before returning, which really does make sense, and probably explains why the DOW is treading water.
Again, all views welcome
Hi Bunks,
I'm still awaiting an RNS saying that G will be decreasing production by 23% in line with the required / agreed cuts from Opec +++.
Obviously, if Countries have to cut, then so do the forms producing the oil - No?
Perhaps I'm missing something?
Alternative views always welcome.
Jack
Jack
I haven't forgotten the drop to the 50's, I don't doubt we'll see a rebound in o.p what is looking illusive to me is what will trigger this... Just don't see how it isn't going much lower based on where we are with the ongoing demand issue and storage filling each day...
How do you guys se this playing out?
Think the next 2 weeks could be crucial for the oil price, before the OPEC+ agreement takes effect on 1st May and given lockdowns are still in place (just extended in the UK and NY state).
Think the next 2 weeks could be crucial for the oil price, before the OPEC+ agreement takes effect on 1st May and given lockdowns are still in place (just extended in London and NY state).
Yes...bunks
So hopefully we are near the bottom...
I don’t solely believe in charts but it’s a useful tool when you take with the crucial fundamentals ..or good to use in day trading which I don’t do.
We just want the oil to play right and stabilise.. but no fears as I don’t accept that oil price can stay very low for long...historically oil price bust always be followed by oil price boom and more crucial now than before ...
So I am shifting to oilers as I did with mines when they were in bust cycles many years ago ...
Money always moves from the impatient to the patient investors by the market machine as per WB..
Patience is required and let’s not forget we were at 56-57 p a few weeks ago ,so we have risen massively since then!
“There are still reasons to be cheerful “
I don't mind us dropping with the market but today was hard to swallow considering other oilers eg RDS was my biggest faller at just over 3% down.
Hasiba - you mean support at 99.8p? I thought next support was in the 80's....
When looking at the latest trades, it seems the stop sell order bottom was triggered at 103.4p...this may explain the deep drop of today..
Maybe bunks. G almost moved in line with my expectations today - although I did have a limit buy order set at 103p this afternoon which did not quite trigger….https://invst.ly/qgxrt
Here they all are since last week’s close, a whole seven days of quarantine ago : https://invst.ly/qgxyr
Resistance at 99.8p so below this I might dare to add?
Oscillator moved to buy after the closing today...
So hopefully not much left to go down from here but more up than down...