capitulation trading , page-6

If you want a more accurate and detailed view on oil prices refer to the EIA forecast http://205.254.135.7/forecasts/steo/

Due to teh amount of speculation in the comodity it coudl go anywhere. $40 level is conceivable however that will only be temporary and will not reflect the fundamental supply demand.

Reality is OPEC still have the biggest influence on oil prices and alot of the OPEC countries are dependant on oil prices above minimum $90 to meet their budgets and provide for their population.

You also need to factor in seasonality which is higher in the second half of the year and Iranian embargo which kicks in 1 st July, supply issues by OPEC countries and potential strike by Israel all of which coudl be significant catalysts for POO.

I also believe analysts have overemphasised the over supply, attributing it predominately to production from US shale. US shale is brining on ~500-700bo/d per year in production, however i dont believe this is still sufficent to account for the depleting production and rserves from the major oil fields.

So what am i getting at, specualtion coudl drive POO down to $40. However that will only occur with an EU meltdown. I think the probability is higher of an EU/ US liquidity injection, coupled with the raesons above to support an oil price above 85 this year. So if you ahve a longer term view you will view this as a buying opportunity.

RFE looks cheap on DCf (HBP) scenario and forward reserves scenario with significant upside to full field development. I still believe a few more wells need to have good results to have the play de-risked. However if you raed about other operators in the region (Eagle is a good case study) you will be astounded at the success rate they are achieveing 90%+ highlighting the consistency of the play.