Down we go, up we go, and where the price of crude oil will end up in the short term, nobody knows.
But if you want to bet that oil-producing nations will finally manage to rein in production in the next few months--enough to give world oil prices a significant lift--some battered energy-related stock groups might benefit more than others.
More on that in a bit, but first: Oil prices rocketed on Monday, sending near-term crude futures on the New York Mercantile Exchange up $1.59, or 13%, to $13.43 a barrel.
It was the biggest one-day gain in more than seven years, and followed last week's dive in prices to a 12-year low of $11.56 a barrel.
Traders pushed prices higher Monday on speculation that the Organization of Petroleum Exporting Countries will agree to further production cuts during its meeting this week.
The oil market "needs a shock after the deterioration of oil prices in the last few months," said Kuwaiti Oil Minister Sheik Saud Nasser Al-Sabah, Platt's Global Alert reported.
Al-Sabah made the comment as he left for the OPEC meeting opening Wednesday in Vienna.
OPEC tried to rescue the depressed oil market by slashing production by 1.7 million barrels a day in March and April. But a global glut has persisted, in part because of falling demand for oil in economically devastated East Asia.
New production cuts have already been pledged. The biggest OPEC exporters, including Saudi Arabia, Venezuela and Iran, have joined smaller OPEC countries with promises to cut an additional 620,000 barrels of production daily, out of current output of about 28.2 million barrels.
Non-OPEC producers Mexico, Russia, Oman and Egypt are trying to help out with promises to remove another 223,000 barrels a day from the glutted market.
But even if all those cuts are made and sustained--and experts have big doubts about that--traders say more than 1 million barrels a day still need to be removed.
Peter Bogin, an analyst at Cambridge Energy Research Associates in Paris, said: "When you look at the numbers, it doesn't add up. There's too much supply going out for the next 18 to 24 months."
OPEC also is haunted by the specter of Iraq's eventual full-scale return to the market.
But what if OPEC surprises everybody--including itself--and manages to stabilize prices? Could a rally ensue in depressed energy stocks?
Some stock groups probably would benefit more than others, analysts say--because the pain generated by the slide in crude prices from $22 a barrel last fall hasn't been equally distributed:
* Oil and gas drilling companies, such as Helmerich & Payne (ticker symbol: HP) and Rowan Cos. (RDC), might get the biggest lift, because they have been hurt the most since last fall, with an average stock price decline of 51% for the group since Oct. 10, according to Standard & Poor's Corp. indexes.
Helmerich's shares have plunged from $45.56 last year to $23.13 now. It gained $1.25 on Monday.
* The next-worst-performing group has been the oil exploration and production sector, off 23%, on average, since Oct. 10. This sector includes such stocks as Oryx Energy (ORX) and Apache Corp. (APA).
* Oil-field services companies, such as Schlumberger (SLB) and Halliburton (HAL) also have been slammed again in recent weeks after rallying in the wake of OPEC's March and April production cuts. The group is off 21%, on average, from last fall.
* Domestic integrated energy giants, meanwhile, haven't lost nearly as much ground, because their fortunes aren't as tied to oil prices as drillers and oil-field service companies. The domestic integrated sector is off 10%, on average, from last fall. The group includes such giants as Atlantic Richfield (ARC) and Sun (SUN).
* Finally, the international integrated companies--such as Exxon (XON) and Amoco (AN)--have suffered least. Their stocks have held up in part because of the "flight to quality" that has boosted blue chips in general.
California ordered 17 firms to stop offering commodity contracts in foreign currency. D2
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Here are the average price changes in five energy-related stock groups since Oct. 10--when crude oil began its long slide from about $22 a barrel to the current $13.43.
Change since Stock sector Oct. 10 International oil +1% Domestic oil -10 Oil field services -21 Oil explor./prod. -23 Oil/gas drilling -51
Source: Bloomberg News