Transocean Ltd. (RIG)

[ogbull]

Crude fell because demand fell. Demand fell because crude prices above $120 halted the expansion of world economic growth. Central banks did all they could but could not end the slow down.

Lower crude prices will stimulate growth.

Both crude and RIG have now put in double bottoms.

The Saudis will retain their market share because prices for WTI below $50 a barrel will “completely halt production” in U.S. shale basins. No need for prices to get any cheaper.

By refusing to cut production in today's market, the Saudis face a serious danger that OPEC may fall apart. Irag, holding the second largest reserves in the world, might pull out and go head to head with the Saudis. The Saudis and OPEC would loss all their clout.

They will do the right thing; they're not that stupid.

Excessive inventories are dropping. The prices of both WTI and RIG will drift around the current bottom for a few weeks and then slowing start to head north.

RIG will hold its on until mid-year when the company suspends their dividend, a move that will be seen as a net positive by shareholders.

Projection: WTI will close 2015 at $55 -- RIG will close the year at $30.