Transocean Ltd. (NYSE:RIG) is looking like a better and better bet for a rebound as oil continues to hold its gains over the year while uncertainty in the space continues to linger. Several years of downturn have led to a huge reduction in breakeven costs for the deepwater industry as companies continue to scrap the substantial surplus of ships from the last oil boom. Rig's management has handled the down cycle admiringly by aggressively scrapping its outdated fleet of ships while continuing to win contracts even in a tough market. Rig's management might be timing the bottom perfectly, by making a key acquisition to build its backlog, while obtaining some top of the line ships for the possible upswing in the market if oil can continue to rally in 2018.
Over the last year oil has swung down by the low to mid $40's a couple of times with strong rebounds coming soon afterward. The latest swing up for oil, from the end of the summer, has continued in a steady climb up as pullbacks are quickly seen as buying opportunities both for Brent as well as WTI.
There have been numerous reports of supply and demand coming more into line with the latest OPEC report citing a larger potential 2018 supply deficit as the market tightens. This is OPEC's last report before its Nov. 30th meeting where the group and its allies are expected to extend their supply-cutting deal. Stronger global demand is seen as giving a tailwind to the supply cuts with demand expected to rise by 1.51 million barrels per day (bpd) to a total of 98.45 bpd while world economic growth is seen accelerating up to 3.7% from 3.5% from OPEC's last report.
One of the biggest potential winners from oil approaching $65 a barrel for Brent
