Bloomburg analyst says BP good value at 410p (he can't see 'em going much lower) and, according to him, Shell are 10% cheaper (372p)and even better value. Recommends buying Shell.
He also added - Oils lost ground because they're defensive and money is going into techs. Now the time to pick up a bargain. Yield of 4.1%. 370p ought to offer support chartwise?

Both Shell and BP have a fair yeild (a good factor if you get caught out on a price drop) The market has been unkind to BP today after all a 60% increase on the last 9 months is not all that bad! I also doubt the policy of investing large sums of money in Russia. History proves the point, however I feel that BP will get sufficient returns on their investment in the short to medium term to compensate for the long term risk

LONDON (AFX) - BP PLC and Royal Dutch/Shell Group declined to comment on a
report that Russian authorities have seized a controlling stake in the oil giant
Yukos.
On Tuesday, following the weekend arrest of Yukos CEO Mikhail Khodorkovsky
on fraud and tax evasion charges, BP CEO Lord Browne reaffirmed his confidence
in BP's Russian partner, TNK. BP has invested some 6.8 bln usd in Russia.
Last month, Shell approved an additional 1 bln usd of investments in Russia,
for the development of the Salym oilfields in Western Siberia.


Didn't take long for the poitical risk to kick in did it? I thought it ought to affect BP more than Shell but seems not (just at this moment). Looks like I jumped the gun buying SHEL. Thought they were cheap at 374p

So did I!!

Shell has now fallen for 10 of the last 11 days and the other one day was flat. 370p support is broken but seems due a bounce. I'm not sure why but the big hedge funds apparently seem to have got it in for BP and Shell. Political risk? or is it more than that?

Brian and optimistic

Fascinating discussion. Where does this leave smaller oil companies in and out of Russia?

Is it possible that Mikhail Khodorkovsky has just become more like western company barons and been stopped in his tracks, breaking the law?

If so, whilst there will be initial worries re BP and Shell, probably make good buys in the long run if you can catch the bottom.

Anji

Catching the the bottom always has been the tricky bit, no matter what analysis you use 'technical or fundamental or both' that elusive point is difficult to hit. However with major oils they always have recovered from low points in the past sufficient to make them into a reasonable trading stock, providing you don't mind the possiblity of having cash tied up occasionally, though as mentioned earlier they do provide a fair yeild. As for smaller oil companies I personally treat them with caution.

Testex

Sound reasoning Paul, I also don't see any great risk in BP. My holding price is 404p I was looking to trade out in the 450/460 range but it didn't quite make last time, but I do not think it is too high a target in the short term.

Just noticed we seem to have drifted off the thread: 'Shell defensive oil stock' but I suppose one is much the same as the other at the moment!

Quite a hit today.
Any thoughts about having a punt for a potential bounce?

hi
yes good idea

i have

even it takes a while SHELL must be a good safe long term share

and if its short term then so much the better

well it was a nice 'short' term share today :)

Watts out and so Shell going well!
Looks like the city has picked it's dummy up off the floor now they've got what they were sulking for.

Holders of Shell will want to read the extensive coverage in todays Telegraph Business section , under heading "damning series of emails lay bare top level rift as exploration head complains of having to "fool" the City and hide the truth on reserves" , and ..."Memos expose years of lying". atm price little changed abt 389p. P.

Hysterical and mostly badly researched media reporting IMO. 85% of the 'lost' reserves will be reclassified as proven in the next ten years. How often do you see that in the media? Almost never.

350p is a rock solid base and, in years to come, 380p will be seen as a steal.

SHELL Final Results comments from Killick & Co

Full year results show the benefits of the strengthening oil price. Net income rose by 48% to $18.5 billion from which the group reported earnings (on a current cost of supplies basis) of $17.6 billion. Production was running at around 3.8 million boe (barrels of oil equivalent) per day, at the high end of the indicative range set at the time of Shells overall strategy review. Of most interest at the moment is the creation of one company, Royal Dutch Shell plc will which be driven from London. This means that the entire market capitalization will be listed in London rather than split in the Netherlands and for tracking funds, the end result will be 20% of the index now represented by oil stocks. Traders believe that trackers still have a huge number of Shell shares to buy to get up to weight.

For all oil stocks, the other main issue is capital expenditure. The higher oil price has led to commercializing other opportunities. However, it is notable that only Exxon and BP are deemed of the majors to be replacing reserves at a higher rate than it is being consumed. Shell is targeting a return to 100% cover but is not there yet. Shell has been pressured during 2004 for having to restate it proven and probable reserves. Unfortunately, it still does not appear to have got to the bottom of this problem with the revelation today that they are re-stating lower by 1.4 billion boe, higher than the 900 million previously anticipated.

The company is now committing to a large share buy back program worth $3 to 5 billion over the next year.

The overall view of these results is positive despite the restatement and with the return of cash and anticipated share buying campaign by the company and trackers should lead to short term relative strength. We remain buyers.

LONDON (AFX) - The Royal Dutch/Shell Group said acquisitions are not crucial
to its ambitions to achieve 100 pct reserve replacement ratio in the five years
to 2008.
The target ratio already factored in certain portfolio actions, including
disposals and product pricing effects.
It will be back-end loaded as most proved reserves will be added in the
latter part of the period as new projects are developed and brought on stream,
Malcolm Brinded, head of Shell's exploration and production business, told
reporters in a news conference.
Brinded said he is "reasonably confident" that Shell will attain its target
even without a sizeable acquisition.
In 2004, the reserve replacement ratio had fallen to 45-55 pct following the
reserves cut. Including asset sale and pricing impact, the ratio declined
further to 15-25 pct.
"In 2005, it will still be less than 100 pct," Brinded said.
Shell has persistently been involved in takeover rumours, the latest one
involved French rival Total and US gas producer Williams.
Brinded said about 10 pct of its reserves have yet to be reviewed by
independent auditors. However, he assured that the risk of further restatement
is low.
Half of that 10 pct, equivalent to over 1 bln barrels of the end-2003 figure
of 14.35 bln, are located in Shell's oil and gas fields in the US.
The reserves have been audited by Shell's internal experts during six weeks
of "rigorous" checking late last year.
Initial indications showed that there will be "very little risk of
non-compliance" with the US Securities and Exchange Commission guidelines,
Brinded added.
Shell will submit the reserves report to the SEC on Feb 20.
The latest downgrade of 1.4 bln barrels came mostly from Shell's fields in
Europe, Africa and the Far East, said Brinded, declining to specify which
projects contributed the biggest cut.

Interesting article in the FT....

Over the past few months, Saudi Arabia has on several occasions sought to ease high oil prices, saying it intends to lift its production capacity by another 2m barrels a day to 12.5m b/d within the next five years, and possibly as high as 15m b/d if strong demand persists.

But its pledge was greeted sceptically by oil traders and prices were only briefly affected.

The investment in drilling rigs is the first concrete evidence that the kingdom has identified a shift in the oil markets towards sustained higher prices.

One oil executive, who works in the region, said: [Saudi Aramco] has changed its attitude a lot in the past six months; it is more confident that oil demand and oil prices are going to remain high.

http://news.ft.com/cms/s/276e0d76-7c67-11d9-8992-00000e2511c8.html

Also lady on Bloomberg believes oil will increase in value in real terms (i.e. not just US dollar price)

I'd considered taking profits on my shell and total shares but i think i'll now keep'm.

"Oil giant BP lost 5p to 552.5p after CSFB downgraded its recommendation on the stock to neutral from outperform.

CSFB explained the downgrade was partly due to the fact that the stock trading is within 1% of its 570p target and also due to the likelihood of technical factors surrounding the Royal Dutch/Shell restructuring weighing on the shares."

The big boys are short of SHEL stock apparently. It'll be worth watching for overperformance against BP. and Total.SA - I might switch to Total if Shell continues to outperform.
Any other oil favorites out here?

Bb, I still have shell to go over 500 pretty soon.

Hi folks, forgive my ignorance as not being a trader as such. Just a quick question to any one prepared to answer.

When trading for serious short term gains, how does the spread come into play. For example I hear of a tight-spread, or a large-spread etc, but is it an inication of a good time to purchase? Essentially what does it indicate?

Thank you