Petroleo Brasileiro: Don't Believe The Hype

Over the past several months we've seen crude oil climb from the mid to high $60 per barrel range to almost the $100 mark. So naturally, public companies involved in the petroleum arena are the direct beneficiaries of the trend. Petroleo Brasileiro S.A. (NYSE: PBR) has been one of those companies. With crude oil on the rise and the speculation of crude oil hitting $100 or much better in the coming months, companies such as Petro Brazil have hit the chord of investors.

The stock rose $24.03 to finally close at $116.77 in Thursday's trading session. Sure the company is buying some assets from Exxon South America and sure they are riding the upward oil trend, but the stock trading above $100 a share is not going to last in my opinion. Petro Brazil in the $85-$90 range is a little more realistic. Investors are just riding the trend but if something changes in the global markets as it relates to crude oil, even though we are heading into the winter months, companies such as Petro Brazil will feel some pain, Exxon Mobil (NYSE: XOM), Valero Energy (NYSE: VLO) and even Chevron Corp (NYSE: CVX) may be better bets than pouring more money into Petro Brazil in my opinion.

Disclosure: none

Comments

[Artem:]

Um...any idea about WHY PBR is outperforming XOM, CVX, etc.??? Does the phrase Tupi Well ring any bells???

2007 Nov 12 03:37 AM

[stagoilman:]

This guyis total idiot...knows nothing about the oil industry obviously....much like all the other a-- h---- that talk about it. It seems he over looked the fact that PBR had a discovery of about 8 billion bbls. with the potential to be much more.

2007 Nov 12 11:38 AM

[Spicer:]

Not 8 billion BBLS, but 5-8 billion BOE. The Tupi field will reach peak production(>200K BOE) in 10-15 years.

2007 Nov 13 05:19 AM

[User 122263:]

I am stunned by the quick increase of PBR since I purchased 100 shares 9/14/07 @ $67/share. This article makes me think I should take my profit now although I bought it for the long haul. I'm a novice with only 4 small stocks in my portfolio diversified one tech SunMicrosystems (500 shares), Calpine (2,000) which is in bankruptcy, & one mutual fund doing ok.

I picked Petroleo Brasileiro because I couldn't afford Exxon which was my #1 pick. Now Exxon is getting within reach. Would you switch if in my shoes??

2007 Nov 12 04:02 PM

[User 122263:]

I am stunned by the quick increase of PBR since I purchased 100 shares 9/14/07 @ $67/share. This article makes me think I should take my profit now although I bought it for the long haul. I'm a novice with only 4 small stocks in my portfolio diversified one tech SunMicrosystems (500 shares), Calpine (2,000) which is in bankruptcy, & one mutual fund doing ok.

I picked Petroleo Brasileiro because I couldn't afford Exxon which was my #1 pick. Now Exxon is getting within reach. Would you switch if in my shoes??

2007 Nov 12 04:02 PM