Are oil dependent stocks ready for a retracement when oil drops to $50/barrel?

Question

When the drillers start hitting enough and pump in the US, won't that be a game changer?

Answer 1

even if that happens (I think it unlikely). oil companies will still make money.

Answer 2

you've asked alot of  questions there.

If oil drops to $50 then that will mean we're in a depression, not recession....and yes, all stocks could retrace, esp. oil/enery.

even if areas in the gulf or alaska are opened up to new drilling, that will take many years before the first barrel flows. A lot can happen in 10 years.

Answer 3

When demand drops, as its been doing, and the market is flooded with oil it will swamp the oil companies and the other companies in the sector.  Supply and demand are hardly ever in synch in this business,  When prices rise it takes a while to get the machinery going to drill and then there is an oversupply. Thats the reason its a boom and bust business. It happened in the 60s.  It happened in the 80s and the 90s.  Embargos and the Israeli war pumped it up through the 70s    After the run up in oil prices I do believe it could hit $50/bbl and maybe lower.  In the 80s the price dropped 65 percent from its highs and 56 percent from 1996-1998.  The US is still the driver in oil consumption.  China and India wont equal it for years.  China and India might be growing fast, from where they started.  But thats kind of like the tortoise catching up with the hare, as long as the haire standing still.