What a chart, further to go, or not
Comments please

OUCH

a new low for PMO 87.60p
now below OPHR 88.50 not seeing for a long time

Tumbling Chinese Oil Demand Provides More Fuel To Sell Premier Oil PLC, Vedanta Resources plc & Enquest Plc
By Motley Fool | Wed, 9th September 2015 - 13:46

Another day, another set of worrying data from commodities glutton China. The country -- which is the world's second largest oil consumer, of course -- has announced that crude import volumes tanked 13% in August from the previous month, to 26.59 million tons.

Although optimists will point out that total oil purchases during January-August are up 10% from the corresponding 2014 period, last month's 5.6% year-on-year gain adds support to the idea that the Chinese economy is rapidly running out of steam.

Monday's news has sent the Brent price further below $50 per barrel, and the benchmark was last camped out around the $49.30 level. This still provides a slight cushion from the six-year lows of $42.50 punched late last month, but I believe crude prices are in danger of plunging again as the steady stream of poor data from Beijing shows no sign of letting up.

Supply woes set to persist

It is generally acknowledged that oil demand continues to rise, and the International Energy Agency (IEA) noted last month that black gold consumption was rising at its quickest pace for five years.

The body now expects 2015 demand growth to clock in at 1.6 million barrels per day, and by 1.4 million barrels next year thanks to ultra-low prices. "Oil's plunge below $50 barrels a day from triple digits a year ago has seen demand react more swiftly than supply," the organisation noted.

However, the IEA commented that supply cutbacks remain slow and are therefore likely to keep prices corked for some time yet, commenting that "while a rebalancing has clearly begun, the process is likely to be prolonged as a supply overhang is expected to persist through 2016... suggesting global inventories will pile up further."

Indeed, the number of rigs operating in the US shale sector has begun to steadily creep higher again thanks to the stabilising crude price, offsetting the effect of rising consumption levels. When you throw into the equation OPEC's commitment to rebuilding its market share; output from the North Sea striking multi-decade highs; and Russian producers pumping like there's no tomorrow, any blip in the global economic recovery is likely to send oil prices tanking again.

Operators under massive pressure

Such developments make terrifying reading for the likes of Premier Oil (LSE:PMO), whose latest financial release last month showed the business swing to a $214.7m pre-tax loss during January-June. It had recorded a profit of $50.7m in the same period last year.

Metals and energy play Vedanta Resources (LSE:VED) -- which generates a fifth of total revenues from fossil fuels -- has also seen profits tumble thanks to the plummeting oil price. Consequently the firm has been forced to write down the value of its Cairn Energy oil division by a huge $3.1bn.

And over at Enquest (LSE:ENQ), the economic health of the business is coming under increased scrutiny as brokers take the hatchet to their crude price forecasts. The firm's colossal net debt pile is also stomping higher -- this registered at an eye-watering $1.28bn as of June -- while costs in the North Sea are also rising. I believe that Enquest, like the rest of the oil industry, remains at risk of prolonged profits pain as the oil market balance endures.

These oilers are a short sellers dream.

Pretty clear many will either go under or need rescue funding hence the death spiral in the share price. It's what the share price will look like if any of them make it out through the other end and hefty dilution. Suppose punters are just in hoping for a takeover but I'm not sure what the attraction is in buying more of something that isn't making a profit.

Don't even start on the small caps. The UKOGs, ROSE and NTOGs and the rest of the rubbish that rely on never ending funding to keep the story going.

UKOG - hohoho! ...... i was taken severely to task either here or on advfn when i suggested it was just a load of over-hyped rubbish

It's only beaten up punters 'averaging down' that is keeping much of the dross afloat.

A good clear out is required on AIM then new stuff can come along but that's years away.

Add the wording as appropriate!

"man with big chopper has cellar full of wood"

That's a big chopper.

From a high of 520p to 82p today.

A new low @72.30p.

It sure has the Lonmin feel/decline about it.

It's got the major debt problem to match as well. Value trap ahoy. It's all a bit of a lost cause this oil sector. Oil on the whole has bounced back over the last 10 odd years but now the odds seem stacked. The shalers may implode sub $50 in the next 12/18 months but then the distressed funds owning all the U.S shale cos' debt will start a Lehman type roll and then the world goes full tits recession... and then and then and then. It's all a bit crap. I don't hold either way but this looks doomed and ready to climb in the coffin of Afren.

Worth watching Australia LNGers... Now they are fuck.. The math won't work for them and they sure do love to carry the debt.

Off 11% today.

Think it has further to fall.

Operational update

makes a change of late to see a positive rns from pmo

Yes - off the highs now.

Barclays Capital Overweight 67.08 190.00 190.00 Reiterates

Deutsche Bank Buy 67.08 215.00 140.00 Reiterates

Premier Oil - time to catch this falling knife?

68.65p +4.50p

Some interest on the stock today though oil price hardly move today
OPHR is also on the rise as it is the rest of smaller companies though not as much on % terms
share price performance: the difference of having a big debt to a big cash on the balance sheet


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Members Primate Gallery

interesting that yet again today both TLW and PMO are having really strong days, albeit from pathetic base lines

crude is up but not by much

Believe that a.o PMO has hedged 2016 production -a long time ago-at $75/80 p/bbl on futures mkt-if that is the case then the dramatic fall in sp is greatly overdone as in my humble opinion we will see a (modest?) rebound in crude lvls during 2nd h 2016 due OPEC members putting pressure on Saudi