Crude finds support as crude, gas stockpiles shrink
Schlumberger acquiring majority stake in Eurasia Drilling Company Limited
U.S. energy independence? A way to reach it
Mexico's energy resurgence is real
Trump approves Eni offshore drilling plan in Alaska
Production ramping up as U.S. rig count climbs again
Oil could go through a lot more pain in the near term.
Robots will be the new oil pipeline inspectors
Saudi Arabia hikes prices with China even as it loses market share there
Time for Saudi's Falih to shut up?
These investors will continue to love Exxon
U.S. rig count up for 20th week in a row
Saturday, May 13, 2017
Wednesday, June 22, 2016
BHP Billiton Completing DUC Wells to Boost Earnings
BHP Billiton (BHP), in search for increased earnings from existing assets, is looking to its DUC wells to provide a boost.
The natural resources giant has some premium wells it has been sitting on that it can quickly complete and make a profit. It didn't reveal how many wells it has that can generate earnings at about $45 per barrel, but it does have about 1,400 it will complete if the price of oil approaches the $60 per barrel mark.
With iron ore expected to be subdued for the next decade, and coking coal producing some profits, BHP needs another profitable revenue stream to move its earnings. Shale oil is an excellent asset, with a relatively small investment needed to get them going.
If oil sustainably jumps past the $50 per barrel mark, it's also looking at developing new wells.
More on BHP Billiton and its DUC wells strategy
The natural resources giant has some premium wells it has been sitting on that it can quickly complete and make a profit. It didn't reveal how many wells it has that can generate earnings at about $45 per barrel, but it does have about 1,400 it will complete if the price of oil approaches the $60 per barrel mark.
With iron ore expected to be subdued for the next decade, and coking coal producing some profits, BHP needs another profitable revenue stream to move its earnings. Shale oil is an excellent asset, with a relatively small investment needed to get them going.
If oil sustainably jumps past the $50 per barrel mark, it's also looking at developing new wells.
More on BHP Billiton and its DUC wells strategy
Oil Rig Productivity 4X what it was 2 years ago
Rig productivity may be a game changer very few investors are taking into consideration, as each rig can produce over 4X what it did a couple of years ago, according to Capital Economics.
In 2014 a rig could pump out about 6,000 barrels of oil per day. Today, a new rig can pump out an average of 27,000 barrels per day. That of course doesn't necessarily mean each well can meet the capacity of the rig, but with the improvement in identifying top-producing wells, it's almost a guarantee they'll come close to it.
What this suggests is the new rigs being added in the U.S. may be pumping out far more oil than the market is looking for, which would offset the decline in production from low-cost shale producers much stronger than expected.
When combined with the increase in production from some OPEC countries, it could be a strong headwind in the months ahead if the new rigs contribute a lot more supply than is being priced in.
More on new oil rigs and increased productivity.
In 2014 a rig could pump out about 6,000 barrels of oil per day. Today, a new rig can pump out an average of 27,000 barrels per day. That of course doesn't necessarily mean each well can meet the capacity of the rig, but with the improvement in identifying top-producing wells, it's almost a guarantee they'll come close to it.
What this suggests is the new rigs being added in the U.S. may be pumping out far more oil than the market is looking for, which would offset the decline in production from low-cost shale producers much stronger than expected.
When combined with the increase in production from some OPEC countries, it could be a strong headwind in the months ahead if the new rigs contribute a lot more supply than is being priced in.
More on new oil rigs and increased productivity.
Saturday, January 23, 2016
ExxonMobil: Several Things Investors Need to Know
Summary
Where its strength - as measured against its peers - gives it some strong potential.
Refining will struggle to maintain recent past performance.
Running leaner should help the company long term.
Credit rating and rising cost of capital could be a risk further out.
Could political correctness over "climate change" take down Exxon Mobil?
Being one of the largest companies in the world and operating in a politically incorrect industry has made Exxon Mobil (NYSE:XOM) a target of many special interest groups and ambitious politicians, hoping to raise money for their cause or secure the next term in office.
Add to that the challenge of an unprecedented low-price oil and gas environment, and it definitely testing the foundations of the company as it takes a number of hits from different sources, while at the same time attempting to keep the company moving forward.
more info on ExxonMobil info investors should know
Where its strength - as measured against its peers - gives it some strong potential.
Refining will struggle to maintain recent past performance.
Running leaner should help the company long term.
Credit rating and rising cost of capital could be a risk further out.
Could political correctness over "climate change" take down Exxon Mobil?
Being one of the largest companies in the world and operating in a politically incorrect industry has made Exxon Mobil (NYSE:XOM) a target of many special interest groups and ambitious politicians, hoping to raise money for their cause or secure the next term in office.
Add to that the challenge of an unprecedented low-price oil and gas environment, and it definitely testing the foundations of the company as it takes a number of hits from different sources, while at the same time attempting to keep the company moving forward.
more info on ExxonMobil info investors should know
Timing of Iran's Oil Exports Not as Important as Some Think
Summary
Projected increase in demand versus ongoing supply.
Beware of temptation to time the oil market.
Some considerations on what to look for.
Dollar cost averaging versus lump sum investing.
Now that the price of oil has plummeted to under $31 per barrel as I write, it's worth taking a look at whether or not it's getting close to consider seriously investing in the commodity, or continue to wait on the sidelines; including whether to initiate a position or add to a position.
Most of the decision should be based on whether or not investors believe it's at least close to a bottom, or at minimum, a price range that reflects being near to a low.
Since I'm not a believer in timing the market, looking at a price range is the best way to analyze where the price of oil is at. The challenge is we're in uncharted territory. Not because we haven't seen significant price fluctuations in oil before, but because we have never seen it after the emergence of shale oil as a significant supplier.
more on Iran's oil exports
Projected increase in demand versus ongoing supply.
Beware of temptation to time the oil market.
Some considerations on what to look for.
Dollar cost averaging versus lump sum investing.
Now that the price of oil has plummeted to under $31 per barrel as I write, it's worth taking a look at whether or not it's getting close to consider seriously investing in the commodity, or continue to wait on the sidelines; including whether to initiate a position or add to a position.
Most of the decision should be based on whether or not investors believe it's at least close to a bottom, or at minimum, a price range that reflects being near to a low.
Since I'm not a believer in timing the market, looking at a price range is the best way to analyze where the price of oil is at. The challenge is we're in uncharted territory. Not because we haven't seen significant price fluctuations in oil before, but because we have never seen it after the emergence of shale oil as a significant supplier.
more on Iran's oil exports
Saudi Aramco: What Type of Returns?
Summary
Largest IPO in history may be on the horizon.
Saudi Arabia looking for revenue alternatives.
Even a small part of Saudi Aramco would be huge.
A number of variables would determine its attraction to investors, including the stock exchange or exchanges it would be listed on.
What this confirms about the oil market and the price of oil. In a recent interview with 'The Economist,' Saudi Arabian deputy crown prince Muhammad bin Salman said one of the things he's taking into consideration as a way to relieve the financial burden on the government from an expected prolonged period of low oil prices, is to go the IPO route with state-owned oil giant Saudi Aramco.
Not only is it the most valuable oil or energy company in the world, it's probably the valuable company in the world too.
Go here for more on investing in Saudi Aramco
Largest IPO in history may be on the horizon.
Saudi Arabia looking for revenue alternatives.
Even a small part of Saudi Aramco would be huge.
A number of variables would determine its attraction to investors, including the stock exchange or exchanges it would be listed on.
What this confirms about the oil market and the price of oil. In a recent interview with 'The Economist,' Saudi Arabian deputy crown prince Muhammad bin Salman said one of the things he's taking into consideration as a way to relieve the financial burden on the government from an expected prolonged period of low oil prices, is to go the IPO route with state-owned oil giant Saudi Aramco.
Not only is it the most valuable oil or energy company in the world, it's probably the valuable company in the world too.
Go here for more on investing in Saudi Aramco
Thursday, January 21, 2016
Oil Price: 2016 won't be good to it
There are a lot of moving pieces with the price of oil, but the bottom line is supply and demand is still the major catalyst for the price movement, and oversupply will continue to be the story throughout 2016, and probably further out.
No matter what type of ancillary stories are published in the financial news, investors should almost solely focus on the supply/demand trend.
I say solely because there are other factors when diving deeper into individual companies. But when looking at where the price of oil is going, the supply and demand equation is by far the most important piece of the price puzzle.
My point is we need to keep from being distracted by other data thrown into the mix. It will have some importance, especially as it relates to certain companies, but it won't have much of an impact - if any - on oil prices.
Not only is the market going to continue to supply more than demand, but supply is going to rise even more with the introduction of Iranian oil into the export market. That will happen fairly soon. The goal of Iran is to boost supply by at least 1 million barrels a day. It hopes to do that by the end of 2016. That may be a stretch, but there is no doubt it'll significantly increase the supply of oil in 2016.
Demand will not be able to keep up with it. It already was going to be difficult to match the oversupply already in the market. Adding Iranian and other oil like that in Indonesia and probably Libya, will continue to make things worse.
More on the 2016 oil price outlook
Wednesday, December 23, 2015
Impetus Behind OPEC's Oil Oversupply Strategy
Current oil price war misunderstood by many.
Maintaining market share isn't the root of the battle.
Why OPEC may never be able to turn off the spigots.
Over the long term, OPEC's loss of market share is foregone conclusion.
What most are missing is market share is still a metric being used to represent the outcome of supply increases, but it's no longer the impetus behind maintaining supply at current levels, and even increasing it over the next year or two.
The problem most aren't seeing is this: what will OPEC do once it reaches the alleged market share position it is seeking to maintain, in light of the known recoverable shale oil reserves around the world?
more on what's driving OPEC's oil supply strategy
Wednesday, December 16, 2015
How Bad Can It Get For Shale Oil?
Summary
There is nothing Saudi Arabia or OPEC can do about shale oil over the long term.
At best they can only delay the inevitable.
Millions of barrels of shale oil will be introduced into the market over the next decade.
Companies with shale exposure, over time, will take market share away from OPEC.
From some of the headlines I've read recently, you would think the U.S. shale industry has been defeated by Saudi Arabia and OPEC, and everything in the oil sector going to return to where things were before shale producers entered the market.
Not only is this a fallacy, it is the exact opposite, which is why the strategy of oversupplying the market will remain in place for now in order to keep the price of oil low, which in turn makes it more difficult to invest in new exploration and development.
The idea of market share being the battleground being fought over is a misguided one because, that would suggest shale oil can be defeated around the world. It's not going to happen. It won't even happen in the U.S., let alone the world.
In the short term there will continue to be pain in the shale segment of the oil sector, as more companies will be forced to go bankrupt, and those that are stronger will have to put development on hold until more favorable market conditions emerge, which of course means a higher oil price.
more on worst-case scenario for shale oil
There is nothing Saudi Arabia or OPEC can do about shale oil over the long term.
At best they can only delay the inevitable.
Millions of barrels of shale oil will be introduced into the market over the next decade.
Companies with shale exposure, over time, will take market share away from OPEC.
From some of the headlines I've read recently, you would think the U.S. shale industry has been defeated by Saudi Arabia and OPEC, and everything in the oil sector going to return to where things were before shale producers entered the market.
Not only is this a fallacy, it is the exact opposite, which is why the strategy of oversupplying the market will remain in place for now in order to keep the price of oil low, which in turn makes it more difficult to invest in new exploration and development.
The idea of market share being the battleground being fought over is a misguided one because, that would suggest shale oil can be defeated around the world. It's not going to happen. It won't even happen in the U.S., let alone the world.
In the short term there will continue to be pain in the shale segment of the oil sector, as more companies will be forced to go bankrupt, and those that are stronger will have to put development on hold until more favorable market conditions emerge, which of course means a higher oil price.
more on worst-case scenario for shale oil
It's OPEC against OPEC!
Summary
OPEC's greatest competitor is now OPEC.
The real reason OPEC oil production levels will remain high.
What the market is transitioning into.
Is a real free market oil industry emerging?
There are a lot of variables behind the reason the price of oil has plunged, as producers ramp up production in an attempt to maintain market share.
When Saudi Arabia and OPEC decided to boost production in response to the serious threat of U.S. shale oil, that was the primary impetus behind pushing prices down, in order to put extreme pressure on the quickly-growing shale competitors before they were too big to be dealt with.
As time as passed though, and U.S. producers have been forced to lower production levels and reduce exploration and development spending, a scenario has emerged that has gravitated to OPEC itself.
With Iran about to be released from sanctions, it has aggressively and publicly stated it will take steps to gain back market share it has lost, and will do what's best for the country, which was a reference to ignoring anything Saudi Arabia had to say about it.
This is one of the reasons the latest OPEC meeting was meaningless, as it was already known by those that really follow the industry and understand what's going on, that there was no chance of an agreement being reached on production cuts. It's doubtful it was even a serious part of the conversation, if it was brought up at all.
more on OPEC's internal competition
OPEC's greatest competitor is now OPEC.
The real reason OPEC oil production levels will remain high.
What the market is transitioning into.
Is a real free market oil industry emerging?
There are a lot of variables behind the reason the price of oil has plunged, as producers ramp up production in an attempt to maintain market share.
When Saudi Arabia and OPEC decided to boost production in response to the serious threat of U.S. shale oil, that was the primary impetus behind pushing prices down, in order to put extreme pressure on the quickly-growing shale competitors before they were too big to be dealt with.
As time as passed though, and U.S. producers have been forced to lower production levels and reduce exploration and development spending, a scenario has emerged that has gravitated to OPEC itself.
With Iran about to be released from sanctions, it has aggressively and publicly stated it will take steps to gain back market share it has lost, and will do what's best for the country, which was a reference to ignoring anything Saudi Arabia had to say about it.
This is one of the reasons the latest OPEC meeting was meaningless, as it was already known by those that really follow the industry and understand what's going on, that there was no chance of an agreement being reached on production cuts. It's doubtful it was even a serious part of the conversation, if it was brought up at all.
more on OPEC's internal competition
Hope for Oil Price Rebound in 2016 Fading
* Outlook for the price of oil in 2016 looks weak.
* Why it'll take a lot for competitors to come to a production cut agreement.
* U.S. shale will remain resilient, but offshore and Canadian sands will struggle.
* There are no visible catalysts to provide support to the price of oil.
It's humorous to see headlines in the financial media bleating out the idea that the price of oil is crashing because of the decision by OPEC to do nothing to reduce production levels.
I've been on the record for a long time saying it's not going to happen, and there were a number of others, understanding what's really happening in the oil industry, coming to the same conclusion.
Maybe some were hoping it would happen, but the disruption caused from the emergence of the U.S. shale industry has forever changed the oil market landscape, and as Saudi Arabia is finding out, it doesn't matter how much supply is brought to market, it is here to stay.
What that suggests is oversupplying the market won't be able to destroy shale. It does mean the days of Saudi Arabian dominance are coming to an end because eventually it'll have to influence other OPEC members to lower production in order to support the price of oil. It will either lose revenue by maintaining or increasing production levels, or lose revenue by lower production and losing market share. There is no third option.
more on 2016 oil price outlook
* Why it'll take a lot for competitors to come to a production cut agreement.
* U.S. shale will remain resilient, but offshore and Canadian sands will struggle.
* There are no visible catalysts to provide support to the price of oil.
It's humorous to see headlines in the financial media bleating out the idea that the price of oil is crashing because of the decision by OPEC to do nothing to reduce production levels.
I've been on the record for a long time saying it's not going to happen, and there were a number of others, understanding what's really happening in the oil industry, coming to the same conclusion.
Maybe some were hoping it would happen, but the disruption caused from the emergence of the U.S. shale industry has forever changed the oil market landscape, and as Saudi Arabia is finding out, it doesn't matter how much supply is brought to market, it is here to stay.
What that suggests is oversupplying the market won't be able to destroy shale. It does mean the days of Saudi Arabian dominance are coming to an end because eventually it'll have to influence other OPEC members to lower production in order to support the price of oil. It will either lose revenue by maintaining or increasing production levels, or lose revenue by lower production and losing market share. There is no third option.
more on 2016 oil price outlook
Thursday, August 6, 2015
Bold Oil Investors Can Make a Killing
Headlines like the one screaming the oil crash has caused losses to date of about $1.3 trillion, should be ignored by those that weren't affected by the disaster, as it has brought about opportunities rarely seen in one's investing lifetime.
The demand for oil is never going to go away, and the price it is now at won't remain at that low level for a long period of time. Producers will simply cut back until the price starts to rise to a level that is profitable to them. That of course has already happened, and it will take time until the effect of it works its way through the market.
That said, I don't see oil prices getting a huge bounce in the short term, and those taking a position in the sector, will need to have patience while waiting for the profits. Those in it for the long term will make a lot of money if they don't sell too quickly.
read more
The demand for oil is never going to go away, and the price it is now at won't remain at that low level for a long period of time. Producers will simply cut back until the price starts to rise to a level that is profitable to them. That of course has already happened, and it will take time until the effect of it works its way through the market.
That said, I don't see oil prices getting a huge bounce in the short term, and those taking a position in the sector, will need to have patience while waiting for the profits. Those in it for the long term will make a lot of money if they don't sell too quickly.
read more
Thursday, January 3, 2013
Transocean (RIG) Soars on $1.4 Billion Settlement Agreement
Shares of Transocean (RIG) skyrocketed on the news the company reached a $1.4 billion settlement agreement with the United States Justice Department over the failure of the oil rig - the Deepwater Horizon.
Transocean, which is based in Switzerland, agreed to pay $1 billion in civil penalties and $400 million in criminal penalties. Also according to the court filing, Transocean plead guilty to violating the Clean Water Act of the United States.
The company stated, "These important agreements, which the company believes to be in the best interest of its shareholders and employees, remove much of the uncertainty associated with the accident. This is a positive step forward, but it is also a time to reflect on the 11 men who lost their lives aboard the Deepwater Horizon. Their families continue to be in the thoughts and prayers of all of us at Transocean."
As for the stock performance of the company, it removal of the uncertainty does help investors and shareholders a more complete look as to the consequences of the accident, which could continue to push the share price up over time.
Transocean had set aside $2 billion to meet the expected costs associated with the drilling rig failure.
The Justice Department has given Transocean two years to pay the $1 billion. The deal still must be approved by a federal judge to be official.
Transocean because of the lack of clarity on its liabilities connected to the failed oil rig, lost about $5.7 billion in 2011.
Shares of Transocean were trading up by $3.51, or 7.59%, as of 2:03 PM EST.
Transocean, which is based in Switzerland, agreed to pay $1 billion in civil penalties and $400 million in criminal penalties. Also according to the court filing, Transocean plead guilty to violating the Clean Water Act of the United States.
The company stated, "These important agreements, which the company believes to be in the best interest of its shareholders and employees, remove much of the uncertainty associated with the accident. This is a positive step forward, but it is also a time to reflect on the 11 men who lost their lives aboard the Deepwater Horizon. Their families continue to be in the thoughts and prayers of all of us at Transocean."
As for the stock performance of the company, it removal of the uncertainty does help investors and shareholders a more complete look as to the consequences of the accident, which could continue to push the share price up over time.
Transocean had set aside $2 billion to meet the expected costs associated with the drilling rig failure.
The Justice Department has given Transocean two years to pay the $1 billion. The deal still must be approved by a federal judge to be official.
Transocean because of the lack of clarity on its liabilities connected to the failed oil rig, lost about $5.7 billion in 2011.
Shares of Transocean were trading up by $3.51, or 7.59%, as of 2:03 PM EST.
Friday, November 2, 2012
Exelon (EXC) (BRY) (WPX) (FM) (MTL) (PEC) (PGN) Ratings Changes
Exelon Co. (EXC), Berry Petroleum Comp (BRY), WPX ENERGY INC (WPX), First Quantum Minerals Limited (FM), Mechel (MTL), Porto Energy Corp. (PEC) and Progress Energy (PGN) had ratings on them adjusted by analysts.
Jefferies Group downgraded Exelon Co. (EXC) from a "Buy" rating to a "Hold" rating. They have a price target of $34.00 on the company.
Haywood Securities downgraded First Quantum Minerals Limited (FM) from a "Sector Perform" rating to an "Underperform' rating.
JPMorgan Chase downgraded Mechel (MTL) from an "Overweight" rating to a "Neutral" rating.
Jennings Capital downgraded Porto Energy Corp. (PEC) from a "Speculative Buy" rating to a "Hold" rating. They have a price target of $0.10 on the company.
GMP Securities downgraded Progress Energy (PGN) from a "Buy" rating to a "Hold" rating.
Barrington Research downgraded Berry Petroleum Comp (BRY) from a "Outperform" rating to a "Market Perform" rating. They have a price target of $39.00 on the company.
Susquehanna upgraded WPX ENERGY INC (WPX) from a "Negative" rating to a "Neutral" rating.
Wednesday, September 5, 2012
Oil Stockpiles Drop 7.2 Million Barrels
Oil stockpiles in the U.S. plunged 7.2 million barrels last week, according to the American Petroleum Institute, pushing up oil prices for the second day in a row.
The drop in inventories was the most occurring in the U.S. in five weeks.
Hurricane Isaac, according to a report from the Energy Department, could result in a decline of 4.95 million barrels. Just under 50 percent of oil production and 26 percent of natural gas production remains shut down as a result of the storm.
As for gasoline stockpiles, it was down 2.3 million barrels last week, said the American Petroleum Institute. Some analysts believe it's close to being 3 million barrels lower.
Oil for October delivery climbed as high as $96.06 a barrel on the New York Mercantile Exchange, a gain of 70 cents. Brent oil for October dropped $1.09, or 1 percent, to $113.09 a barrel on the ICE Futures Europe exchange, based in London.
Exxon Mobil (XOM) closed Wednesday at $87.33, gaining $0.21, or 0.24 percent. ConocoPhillips (COP) ended the session at $54.87, falling 1.34, or 2.38 percent. Chevron (CVX) closed at $110.77, down $0.45, or 0.40 percent.
The drop in inventories was the most occurring in the U.S. in five weeks.
Hurricane Isaac, according to a report from the Energy Department, could result in a decline of 4.95 million barrels. Just under 50 percent of oil production and 26 percent of natural gas production remains shut down as a result of the storm.
As for gasoline stockpiles, it was down 2.3 million barrels last week, said the American Petroleum Institute. Some analysts believe it's close to being 3 million barrels lower.
Oil for October delivery climbed as high as $96.06 a barrel on the New York Mercantile Exchange, a gain of 70 cents. Brent oil for October dropped $1.09, or 1 percent, to $113.09 a barrel on the ICE Futures Europe exchange, based in London.
Exxon Mobil (XOM) closed Wednesday at $87.33, gaining $0.21, or 0.24 percent. ConocoPhillips (COP) ended the session at $54.87, falling 1.34, or 2.38 percent. Chevron (CVX) closed at $110.77, down $0.45, or 0.40 percent.
Thursday, July 12, 2012
Oil Supported By QE3 Probability
With most investors believing it's inevitable that Ben Bernanke will institute another round of quantitative easing, it has helped support oil prices which otherwise would probably drop much further than the support it has found in the mid $80 a barrel range.
That has also helped shore up the price of other commodities as well, which would have otherwise plummeted even worse than they have been.
Add to that the enormous upward move of the U.S. dollar, weakening China and Brazil, along with devastated Europe, and you see how the price of commodities, outside of agriculture, should be dropping much more than they have.
But the bears have to be careful after learning from the past that Ben Bernanke's propensity to print money is insatiable, and it's only a matter of when he'll do it again, not if he's going to do it.
That's the great uncertainty in the market which keeps support under oil and other commodity prices. And that's even when everyone knows over the long haul more stimulus won't help the economy at all, but it will give a short-term psychological boost, which will push up the prices of many commodities.
Another support for commodities is in regard to the decision by European leaders to commit to taking further steps to shore up the system. While there are still no particulars there, it remains in the back of the mind of bears who would love to short the market even more, but could easily get hit hard if the Federal Reserve stimulates and Europe clarifies what steps it plans on taking going forward. Those elements, more than anything else, are keeping the price of oil from plummeting to below $50 a barrel at this time.
Unwillingness to bet against the probability of another round of quantitative easing is what's standing between the free fall of the price of most commodities.
That's why with oil the price will probably remain in the $80s until more clarity is revealed.
The next important moment is when Ben Bernanke addresses Congress next week about the state of the economy. Traders and investors will listen closely for any clue on which way things may go in the short term.
That has also helped shore up the price of other commodities as well, which would have otherwise plummeted even worse than they have been.
Add to that the enormous upward move of the U.S. dollar, weakening China and Brazil, along with devastated Europe, and you see how the price of commodities, outside of agriculture, should be dropping much more than they have.
But the bears have to be careful after learning from the past that Ben Bernanke's propensity to print money is insatiable, and it's only a matter of when he'll do it again, not if he's going to do it.
That's the great uncertainty in the market which keeps support under oil and other commodity prices. And that's even when everyone knows over the long haul more stimulus won't help the economy at all, but it will give a short-term psychological boost, which will push up the prices of many commodities.
Another support for commodities is in regard to the decision by European leaders to commit to taking further steps to shore up the system. While there are still no particulars there, it remains in the back of the mind of bears who would love to short the market even more, but could easily get hit hard if the Federal Reserve stimulates and Europe clarifies what steps it plans on taking going forward. Those elements, more than anything else, are keeping the price of oil from plummeting to below $50 a barrel at this time.
Unwillingness to bet against the probability of another round of quantitative easing is what's standing between the free fall of the price of most commodities.
That's why with oil the price will probably remain in the $80s until more clarity is revealed.
The next important moment is when Ben Bernanke addresses Congress next week about the state of the economy. Traders and investors will listen closely for any clue on which way things may go in the short term.
Wednesday, July 11, 2012
Chevron (CVX) Says Q2 Profits Will Surpass Prior Quarter
Profits for the second quarter will surpass the first quarter, according to Chevron Corp. (CVX), citing better margins from its refining operations.
Refining margins climbed higher than the previous quarter, rising to $4 a barrel to $24.89, while West Coast margins rose to $21.32 a barrel
Oil and gas production in the U.S. also improved for the quarter, jumping an average of 665,000 barrels per day during April and May, up from the 651,000 barrels per day average in the first quarter. The increase was largely a result of increased production in the Gulf of Mexico.
Globally oil equivalent production dropped from 2.63 million bpd in the first quarter to 2.62 million bpd in the latest quarter. That is falling below it projected average for 2012 of 2.68 million bpd.
The declining global production was the consequence of the ongoing "shut-in of production at the Frade field in Brazil and planned maintenance in Kazakhstan contributed to the majority of the decline," said the energy giant.
A report will be released next week by Brazil's oil regulator on the causes of the oil spill which shut down Frade since March. That lowered Chevron's production by 30,000 bpd.
Chevron closed Wednesday at $104.85, up $0.97, or 0.93 percent.
Refining margins climbed higher than the previous quarter, rising to $4 a barrel to $24.89, while West Coast margins rose to $21.32 a barrel
Oil and gas production in the U.S. also improved for the quarter, jumping an average of 665,000 barrels per day during April and May, up from the 651,000 barrels per day average in the first quarter. The increase was largely a result of increased production in the Gulf of Mexico.
Globally oil equivalent production dropped from 2.63 million bpd in the first quarter to 2.62 million bpd in the latest quarter. That is falling below it projected average for 2012 of 2.68 million bpd.
The declining global production was the consequence of the ongoing "shut-in of production at the Frade field in Brazil and planned maintenance in Kazakhstan contributed to the majority of the decline," said the energy giant.
A report will be released next week by Brazil's oil regulator on the causes of the oil spill which shut down Frade since March. That lowered Chevron's production by 30,000 bpd.
Chevron closed Wednesday at $104.85, up $0.97, or 0.93 percent.
Monday, June 25, 2012
Buy Encana (ECA) Says Nenner
In an interview on Breakout, Charles Nenner gave his input on the price movements of oil and natural gas, where he sees the recent roles being reversed as oil continues to drop in price while natural gas has jumped from $1.80 about a month ago to $2.70 now. Nenner was very close to calling that exact, where he saw natural gas dropping to $1.70 before it rebounded.
From the end of April, oil has plummeted over 20 percent, while natural gas has climbed over 30 percent during the same period.
Going forward, Nenner, who tracks momentum and cycles in the two industries, said he doesn't see crude stopping it decline until November, where sees it going to as low as $68 a barrel. It makes one wonder if the Obama administration isn't manipulating the markets, as it is voting time right when oil is supposed to hit that level.
It also makes one wonder why natural gas is soaring, as that will ultimately be a positive for the anemic and sometimes unethical, so-called green energy sector, as it'll make it more competitive with natural gas, which has drawn much of the shine away from those boondoggles surrounding the very expensive alternative energy sources.
For natural gas, he sees it staying weak into the latter part of July before continuing to climb in price. In other words, traders and investors still have an opportunity to get in on natural gas before it continues to climb.
If you're not buying natural gas futures, Nenner recommends Encana Corp. (NYSE: ECA) as his top stock pick in the sector. He recommends waiting until July to get into it.
Nenner doesn't see oil picking back up until November.
Encana closed at $19.40, dropping $0.82, or 4.13 percent.
From the end of April, oil has plummeted over 20 percent, while natural gas has climbed over 30 percent during the same period.
Going forward, Nenner, who tracks momentum and cycles in the two industries, said he doesn't see crude stopping it decline until November, where sees it going to as low as $68 a barrel. It makes one wonder if the Obama administration isn't manipulating the markets, as it is voting time right when oil is supposed to hit that level.
It also makes one wonder why natural gas is soaring, as that will ultimately be a positive for the anemic and sometimes unethical, so-called green energy sector, as it'll make it more competitive with natural gas, which has drawn much of the shine away from those boondoggles surrounding the very expensive alternative energy sources.
For natural gas, he sees it staying weak into the latter part of July before continuing to climb in price. In other words, traders and investors still have an opportunity to get in on natural gas before it continues to climb.
If you're not buying natural gas futures, Nenner recommends Encana Corp. (NYSE: ECA) as his top stock pick in the sector. He recommends waiting until July to get into it.
Nenner doesn't see oil picking back up until November.
Encana closed at $19.40, dropping $0.82, or 4.13 percent.
Friday, June 22, 2012
Key Energy (KEG) (BCEI) (CLD) (SYRG) (WFT) (PGH) Ratings, Price Targets
Key Energy (KEG), Bonanza Creek Energy Inc (BCEI), Cloud Peak Energy (CLD), Synergy Resources (SYRG), Weatherford (WFT) and Pengrowth Energy Trust (PGH) had ratings and price targets on them adjusted by analysts.
Wunderlich Securities initiated coverage on Bonanza Creek Energy (BCEI). They placed a "Buy" rating and price target of $29.00 on the company.
JPMorgan Chase (NYSE:JPM) initiated coverage on Cloud Peak Energy (CLD). They placed a "Neutral" rating and price target of $16.00 on the company.
Wunderlich Securities initiated coverage on Synergy Resources (SYRG). They placed a "Buy" rating and price target of $5.00 on the company.
Macquarie initiated coverage on Weatherford (WFT). They placed an "Outperform" rating on the company.
Raymond James (NYSE:RJF) downgraded Pengrowth Energy Trust (PGH) from an "Outperform" rating to a "Market Perform" rating.
FBR Capital downgraded Key Energy (KEG) from an "Outperform" rating to a "Market Perform" rating. They lowered their price target on the company from $18.00 to $9.00.
Wunderlich Securities initiated coverage on Bonanza Creek Energy (BCEI). They placed a "Buy" rating and price target of $29.00 on the company.
JPMorgan Chase (NYSE:JPM) initiated coverage on Cloud Peak Energy (CLD). They placed a "Neutral" rating and price target of $16.00 on the company.
Wunderlich Securities initiated coverage on Synergy Resources (SYRG). They placed a "Buy" rating and price target of $5.00 on the company.
Macquarie initiated coverage on Weatherford (WFT). They placed an "Outperform" rating on the company.
Raymond James (NYSE:RJF) downgraded Pengrowth Energy Trust (PGH) from an "Outperform" rating to a "Market Perform" rating.
FBR Capital downgraded Key Energy (KEG) from an "Outperform" rating to a "Market Perform" rating. They lowered their price target on the company from $18.00 to $9.00.
Friday, June 1, 2012
Exxon (XOM) Receives Approval for Hebron
Exxon Mobil (NYSE: XOM) received approval from Labrador Offshore Petroleum Board and Newfoundland to proceed with plans to develop the Hebron oil field. The field is located off Newfoundland, Canada.
Partners with Exxon in the endeavor include Chevron (NYSE: CVX), with a 26.7 percent interest; Suncor Energy (NYSE: SU), with 22.7 percent; and Statoil ASA (NYSE: STO), with 9.7 percent. Exxon has a 36 percent stake in the field.
Locally, Energy Corporation of Labrador and Newfoundland has a 4.9 percent stake in the venture.
Production at the field is expected to average approximately 150,000 barrels a day, although it could rise as high as 180,000 barrels a day.
There are an estimate 707 million barrels of oil located in the Hebron oil field.
Partners with Exxon in the endeavor include Chevron (NYSE: CVX), with a 26.7 percent interest; Suncor Energy (NYSE: SU), with 22.7 percent; and Statoil ASA (NYSE: STO), with 9.7 percent. Exxon has a 36 percent stake in the field.
Locally, Energy Corporation of Labrador and Newfoundland has a 4.9 percent stake in the venture.
Production at the field is expected to average approximately 150,000 barrels a day, although it could rise as high as 180,000 barrels a day.
There are an estimate 707 million barrels of oil located in the Hebron oil field.
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