May 5: Tough Day for E&P Stocks

[dan_s]

Here is why oil dropped so far today. A lot of commodity traders use margin to buy the contracts. They put on tight "Stop Loss Orders". When the price starts to drop it can cut through those trades and really cause a big dip. Contributing to the selloff:
> Bearish storage report yesterday (followed by a somewhat bearish NG storage report today)
> Report of declining demand for fuel in the U.S.
> Bad unemployment numbers (equals lower oil demand)
> U.S. Dollar getting stronger (make no sense to me as we plunge deeper and deeper into debt)
> No terrorist attack in retaliation to U.S. killing Bin Laden (maybe the Middle East will suddenly settle down? Don't count on that happening!

My head was down all day working on CLR, DNR, GPOR and PXP. All look fantastic! See my updated forecast models and new Fair Value estimates under the Sweet 16 Tab,