However as we explain in The Fed vs. OPEC who will blink first , we should soon know how lower economic activity in the US affects oil prices. Once that uncertainty has been removed, energy stocks would also reflect the new fundamentals, which determine the prices of crude oil. Therefore except in the case of a general plunge in share prices, the current Bull Run in energy shares might continue for quite awhile. First, because when speculative premiums are being built into share prices, not all shares are equal . Some have better stories to rationalize the rise in their prices.
Some stocks rise before other stocks and some also stall before other stocks.
Second, in the real world not all energy companies will be lucky to add significantly to their production and reserves. Triton after rising to almost 50 dollars fell to less than 25 dollars. When it was clear that the talk about 500-1000 million barrels of oil reserves in that field are unfounded, the stock dropped sharply. Another piece of new information that also contributed to the decline in the price of the stock was the admission by the company that oil production from its fields in Colombia are declining rapidly and are now expected to continue to decline in 2001 to some 25,000 bpd from 33,000 bpd in 2000. Triton already drilled two new exploratory wells in its EG concession however those were dry holes.