Australian Investment Blog

Oil production-freeze talks in Doha collapse After extending talks for 10 hours in Doha (capital of Qatar) OPEC members and Russia, which represent over 50% of the world oil production, have just failed to implement any freeze on supply Simply Saudi Arabia, the world's largest oil producer, refuse to limit production unless Iran joins the agreement BUT Iran who have just started shipping oil after nuclear sanctions were lifted regard any production limitations on itself as "ridiculous". The market felt optimistic prior to Doha hence we anticipate at least a short term snap back in the oil price which has rallied over 50% since the panic lows in January. Crude Oil The resource based currencies are already weak with the $A spiking under 76c on the news; this looks likely to be the catalyst for the short term correction in equities we discussed in the weekend report. US equities in particular have recently been highly correlated to the oil price which has just opened 6.7% lower on the Doha news. The question is; do we use this likely spike down in oil stocks as a buying opportunity? We are simply going to look at the leading three stocks in the space for answers: BHP Billiton (BHP) Recently we changed our view on BHP targeting continued strength towards the $21 area, BHP was already looking to open down ~50c, this may easily extend to $1 on the Doha news. On a risk reward basis we can buy BHP in the $18.25 area, targeting $21 with stops under $16.70. Woodside Petroleum (WPL) WPL continues to underperform relative to the sector, a characteristic we do not like e.
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