* 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.
more on 2016 oil price outlook
Showing posts with label Oil Prices. Show all posts
Showing posts with label Oil Prices. Show all posts
Wednesday, December 16, 2015
Wednesday, September 2, 2015
Gazprom's Earnings Continue to Soar
If weak gas and oil prices were supposed to devastate the industry, Gazprom (OGZPY) is one of the last companies to hear about it, as it has been producing great earnings. And with a P/E ratio of about 5, it is a great value play.
There have been two major catalysts behind Gazprom's great year. The most important has been the shrinking value of the ruble, and second, was the decision by Russia to lower export taxes earlier in 2015. That combination has driven nice results for the natural gas and oil giant.
In its latest quarter it generated $4.75 billion in net profit, a gain of 29 percent year-over-year. It also enjoyed an annual growth rate of 50 percent in the first half.
Investors need to understand that even in the midst of a low-price or depressed commodity market, there is more than one way for a company to make money. Those able to identify them, as in the case of Gazprom, will get in before prices are bid up.
The reason why Gazprom has been doing so well is its costs mostly are domestic, which means they're traded in rubles, while its sale are primarily in the U.S. dollar and euro. The difference in value between them is what is driving Gazprom's success.
Add to that its continual strong performance in Europe, which represents approximately 56 percent of its export business, and the deals with China which will be a serious revenue and earnings source for many years, and you can see why Gazprom should continue to surprise to the upside.
As for the ruble, it's under pressure from low gas prices, but when it moves up again, it will take the ruble with it. That means, unless the ruble really soars in response to a rise in gas prices, margin and earnings should continue to do very well.
In the meantime, it's good entry point for Gazprom, and if you believe there is more room for gas prices to drop, it'll get even better. But as it is, this is a great time to think seriously about taking a position in Gazprom, as risk/reward is aligned nicely.
There have been two major catalysts behind Gazprom's great year. The most important has been the shrinking value of the ruble, and second, was the decision by Russia to lower export taxes earlier in 2015. That combination has driven nice results for the natural gas and oil giant.
In its latest quarter it generated $4.75 billion in net profit, a gain of 29 percent year-over-year. It also enjoyed an annual growth rate of 50 percent in the first half.
Investors need to understand that even in the midst of a low-price or depressed commodity market, there is more than one way for a company to make money. Those able to identify them, as in the case of Gazprom, will get in before prices are bid up.
The reason why Gazprom has been doing so well is its costs mostly are domestic, which means they're traded in rubles, while its sale are primarily in the U.S. dollar and euro. The difference in value between them is what is driving Gazprom's success.
Add to that its continual strong performance in Europe, which represents approximately 56 percent of its export business, and the deals with China which will be a serious revenue and earnings source for many years, and you can see why Gazprom should continue to surprise to the upside.
As for the ruble, it's under pressure from low gas prices, but when it moves up again, it will take the ruble with it. That means, unless the ruble really soars in response to a rise in gas prices, margin and earnings should continue to do very well.
In the meantime, it's good entry point for Gazprom, and if you believe there is more room for gas prices to drop, it'll get even better. But as it is, this is a great time to think seriously about taking a position in Gazprom, as risk/reward is aligned nicely.
Thursday, August 6, 2015
An Opportunity Of A Lifetime For Some Oil Investors
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.
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.
read more
Wednesday, October 10, 2012
U.S. Oil Stockpiles Rise for Second Straight Month
For the second month in a row U.S. oil wholesalers boosted their stockpiles, pushing the benchmark price of oil up past the $93 mark in morning trading.
According to the Commerce Department, oil wholesalers in the United States raised their inventory by 0.5 percent in August, following a 0.6 percent jump in July. Also significant is the sales of oil wholesalers climbed by the largest margin since February 2012.
The reason for the rise in oil prices in response to the data is usually it signals wholesales believe oil sales will rise in the near term.
Gasoline for the national average in the United States remains at $3.81 a gallon.
Tuesday, October 9, 2012
December Gold Drops Over $10 an Ounce
Some commodity prices were under pressure Tuesday after a report from the International Monetary Fund revealed it slashed global economic growth for the year from 3.5 percent to 3.3 percent.
Gold for December delivery dropped $10.70 an ounce to settle at $1,765. December silver was down 3.2 cents an ounce to $33.985. January platinum fell $3.50 to settle at $1,695.30 an ounce.
Unsurprisingly, the IMF confirmed the leading economies of the world are at risk of recession, although the reality is we've really never emerged from latest recession, and there has been no recovery.
Those commodities moving up on the day included energy, palladium and wheat. Soybeans fell a penny to $15.50 a bushel. Palladium climbed to $658.20, up $1.25 an ounce.
Concerns over supply because of a slowdown in production in the North Sea and rising tensions in the Middle East were behind the rise in energy prices. Recent fires at a refinery in the U.S and another in Russia has also added price support in some energy segments.
Benchmark crude oil futures climbed $3.06, or 3.4 percent, to settle at $92.39 a barrel in New York. That is the highest level in over a week. Brent crude closed at $114.50, jumping $2.68, or 2.4 percent.
Heating oil increased by 5.89 cents to $3.2032 a gallon, and wholesale gasoline was up 6.56 cents to $2.9587 a gallon. Natural gas was up by 6.4 cents to $3.467 per 1,000 cubic feet.
The Dow Jones Industrial Average plunged 110 points to close at 13,473, a loss of 0.8 percent. The S&P 500 Index dropped to 1,441, losing 14 points or just under 1 percent.
The ICE dollar index climbed to 80.023, up from Monday's 79.595.
Gold for December delivery dropped $10.70 an ounce to settle at $1,765. December silver was down 3.2 cents an ounce to $33.985. January platinum fell $3.50 to settle at $1,695.30 an ounce.
Unsurprisingly, the IMF confirmed the leading economies of the world are at risk of recession, although the reality is we've really never emerged from latest recession, and there has been no recovery.
Those commodities moving up on the day included energy, palladium and wheat. Soybeans fell a penny to $15.50 a bushel. Palladium climbed to $658.20, up $1.25 an ounce.
Concerns over supply because of a slowdown in production in the North Sea and rising tensions in the Middle East were behind the rise in energy prices. Recent fires at a refinery in the U.S and another in Russia has also added price support in some energy segments.
Benchmark crude oil futures climbed $3.06, or 3.4 percent, to settle at $92.39 a barrel in New York. That is the highest level in over a week. Brent crude closed at $114.50, jumping $2.68, or 2.4 percent.
Heating oil increased by 5.89 cents to $3.2032 a gallon, and wholesale gasoline was up 6.56 cents to $2.9587 a gallon. Natural gas was up by 6.4 cents to $3.467 per 1,000 cubic feet.
The Dow Jones Industrial Average plunged 110 points to close at 13,473, a loss of 0.8 percent. The S&P 500 Index dropped to 1,441, losing 14 points or just under 1 percent.
The ICE dollar index climbed to 80.023, up from Monday's 79.595.
Thursday, October 4, 2012
Oil Prices Jump on Mideast Turmoil, Refinery Fires
Several events on Thursday caused the price of crude oil futures to rise, as Turkey attacked Syria and refinery fires in Texas and Russia helped oil to climbed by four percent over Wednesday.
In the Middle East, Turkey hit Syria with retaliatory strikes after parts of the southeastern part of Turkey were shelled yesterday.
The Turkish parliament also sent a message to Syria by approving further strikes if Syrian internal battles end up spilling over into Turkey again.
Concerns that things could escalate and oil supply disruptions could result are the main impetus behind the rise in prices. Shorts started covering their positions after the plunge in oil prices on Wednesday.
Oil Refinery Fires
As for the other events, the refinery of Exxon Mobil (XOM) in Baytown, Texas, which is the largest refinery operating in the U.S. at this time, caught on fire. It produces an average of 560,000 barrels a day.
In Russia, a refinery in Saratov, which produces about 130,000 barrels a day, also caught fire.
Oil settled at $91.71 a barrel, jumping $3.57, or 4 percent, on the New York Mercantile Exchange.
The national average for a gallon of regular gasoline rose to $3.784, up two-tenths of a cent from Wednesday, and 38 cents in comparison to a year ago, according to AAA.
Brent crude increased by $4.41, or 4.1 percent, to $112.58.
Natural gas was up a penny to $3.406 per 1,000 cubic feet.
Heating oil climbed 12.2 cents, or 4 percent, to $3.1884 a gallon.
Monday, September 17, 2012
Will Oil Trigger Next Recession?
I was confident that the Fed had already begun printing. That seemed quite evident by the overall action in the commodity markets, the dollar, and the fact that stocks were unable to correct in the normal timing band for a daily cycle low. However, I didn’t really expect Ben would come out and publicly admit it. That one took me by surprise Thursday. I guess Bernanke wants to get full value for his attack on the dollar and make sure that markets are rising into the election.
At this point all the pieces are in place for the inflationary spike and currency crisis I’ve been predicting for 2014. We now have open ended QE that is tied to economic output and unemployment. But since debasing currencies has historically never been the cure for the bursting of a credit bubble, all the Fed is going to produce is spiraling inflation. So as this progresses we are going to see the Fed printing faster and faster as the result they are looking for never materializes. This is what will ultimately drive the currency crisis at the dollar’s next three year cycle low in 2014.
At this point, watch the price of oil if you want to know when the next recession is going to begin. As I’ve pointed out many times in the past, recessions (well, at least since World War II) have all been preceded by a sharp spike in the price of energy. Any move of 100% or more in a year or less, has historically been the straw that breaks the camel's back. Modern economies cannot survive that kind of shock. It invariably triggers the collapse of consumer discretionary spending and economic activity comes to a grinding halt.
In 2007 oil surged out of the 3 year cycle low into a parabolic advance as Bernanke trashed the dollar in the vain attempt to halt the sub-prime collapse. That 200% spike in oil is what tipped the economy over into recession, which was then magnified in the fall of `08 as the financial bubble and debt markets imploded.
I think it’s safe to say that Bernanke doesn’t understand his role in causing the recession of 08/09 as he is now making the same mistake again. I think he believes the recession was solely triggered by the financial meltdown. That was the icing on the cake, but not the initial trigger that caused the recession.
Despite the complete inability of QE to heal the economy or job market, and since he really has no other tool, Bernanke just keeps doing the same thing over and over expecting a different result, but never getting it.
Commodities are the check that prevents Keynesian economic policies from healing the global economy. Keynesian academics either don’t understand this, or refuse to acknowledge it. Until they do, or we install Austrian economic advisers in the government, we are destined to continue making the same mistakes over and over.
So we will watch the price of oil as it rises out of its three year cycle low. If it hits $160 by next summer that will probably be enough to start the economy on the next downward spiral. If politicians get involved (and I’m sure they will) and try to impose price controls, they will multiply the damage and probably guarantee that the next economic downturn escalates into a truly catastrophic depression.
Until we see the spike in oil and the corresponding damage to the economy, no one has any business try to short anything, well maybe bonds, but even that will be risky because the Fed is going to be actively trying to prop the bond market up and keep interest rates artificially low.
All in all there is going to be so much money to be made on the long side, especially in precious metals, that no one needs to fool around with puny little gains on the short side, especially in a market that is going to be hell to trade from the short side. The time to sell short will be in 2014 after the dollar’s next three year cycle low. The dollar’s rally out of that bottom will correspond with the next global economic collapse, ultimately caused by the decisions made by the ECB and the Fed this past week. I dare say if they could see the damage their decisions are going to inflict upon the world and the dire unintended consequences, maybe they would finally stop kicking the can down the road and let the economy heal naturally. Of course that would entail several years of severe pain and politicians, as we all know, are extremely allergic to that.
2014-2015 is when we are going to see the stock market drop 60-75% and the next great leg down in this secular bear market. But until then there’s probably a pretty good chance we are going to see the S&P at new all time-highs in the next 6 months – 12 months.
Source
At this point all the pieces are in place for the inflationary spike and currency crisis I’ve been predicting for 2014. We now have open ended QE that is tied to economic output and unemployment. But since debasing currencies has historically never been the cure for the bursting of a credit bubble, all the Fed is going to produce is spiraling inflation. So as this progresses we are going to see the Fed printing faster and faster as the result they are looking for never materializes. This is what will ultimately drive the currency crisis at the dollar’s next three year cycle low in 2014.
At this point, watch the price of oil if you want to know when the next recession is going to begin. As I’ve pointed out many times in the past, recessions (well, at least since World War II) have all been preceded by a sharp spike in the price of energy. Any move of 100% or more in a year or less, has historically been the straw that breaks the camel's back. Modern economies cannot survive that kind of shock. It invariably triggers the collapse of consumer discretionary spending and economic activity comes to a grinding halt.
In 2007 oil surged out of the 3 year cycle low into a parabolic advance as Bernanke trashed the dollar in the vain attempt to halt the sub-prime collapse. That 200% spike in oil is what tipped the economy over into recession, which was then magnified in the fall of `08 as the financial bubble and debt markets imploded.
I think it’s safe to say that Bernanke doesn’t understand his role in causing the recession of 08/09 as he is now making the same mistake again. I think he believes the recession was solely triggered by the financial meltdown. That was the icing on the cake, but not the initial trigger that caused the recession.
Despite the complete inability of QE to heal the economy or job market, and since he really has no other tool, Bernanke just keeps doing the same thing over and over expecting a different result, but never getting it.
Commodities are the check that prevents Keynesian economic policies from healing the global economy. Keynesian academics either don’t understand this, or refuse to acknowledge it. Until they do, or we install Austrian economic advisers in the government, we are destined to continue making the same mistakes over and over.
So we will watch the price of oil as it rises out of its three year cycle low. If it hits $160 by next summer that will probably be enough to start the economy on the next downward spiral. If politicians get involved (and I’m sure they will) and try to impose price controls, they will multiply the damage and probably guarantee that the next economic downturn escalates into a truly catastrophic depression.
Until we see the spike in oil and the corresponding damage to the economy, no one has any business try to short anything, well maybe bonds, but even that will be risky because the Fed is going to be actively trying to prop the bond market up and keep interest rates artificially low.
All in all there is going to be so much money to be made on the long side, especially in precious metals, that no one needs to fool around with puny little gains on the short side, especially in a market that is going to be hell to trade from the short side. The time to sell short will be in 2014 after the dollar’s next three year cycle low. The dollar’s rally out of that bottom will correspond with the next global economic collapse, ultimately caused by the decisions made by the ECB and the Fed this past week. I dare say if they could see the damage their decisions are going to inflict upon the world and the dire unintended consequences, maybe they would finally stop kicking the can down the road and let the economy heal naturally. Of course that would entail several years of severe pain and politicians, as we all know, are extremely allergic to that.
2014-2015 is when we are going to see the stock market drop 60-75% and the next great leg down in this secular bear market. But until then there’s probably a pretty good chance we are going to see the S&P at new all time-highs in the next 6 months – 12 months.
Source
Friday, March 4, 2011
Jim Rogers Remains Bullish on All Commodities
In an interview with CNBC-TV18's Sonia Shenoy and Ekta Batra, commodity expert and billionaire Jim Rogers gave his take on the unrest in the Middle East and how that's affecting his investment decisions.
Here's a look at what Rogers said:
Q: What is your estimate, what have you made of the fresh wave of geopolitical risk? Do you think the situation in Libya could get worst?
A: Ofcourse it can get worse. It can turn into a civil war which can rage for a long time. I doubt it will, given the state of the world. But now we are having more and more social unrest, certainly we are going to have a lot of social unrest. The price of food is going up. When food prices go up, people get out agitated and they look for someone to blame.
Q: I recollect you stating in the month of January that crude may just surge all the way up to USD 150 per barrel, it is sort of getting there, Brent is now USD 106 per barrel, what is your estimate of how high crude could escalate, if the situation gets worse?
A: Certainly, it can go to USD 150 per barrel over the next decade. I have no idea what will happen this year. If Libya calms down and everybody else does, it will go down for a while. If the UK goes bankrupt or some sudden surprise happens, everything will go down. But crude oils is going to go over USD 150 per barrel, it is going to go to a couple of 100s in the next decade.
Q: What, according to you, is a good investment right now; do you think that investors should turn bullish towards precious metals to hedge their bets at this point in time?
A: Firstly, I have started looking at shorting US government bonds. I think they are turning into a real bubble because of this situation in the Middle East. People are flooding into US government bonds, which is a mistake. I have bought a small tractor company in Japan today because they are starting to infuse huge amounts of money in Japan trying to solve their agricultural problems. I am bullish on agriculture, I am bullish on all commodities.
Here's a look at what Rogers said:
Q: What is your estimate, what have you made of the fresh wave of geopolitical risk? Do you think the situation in Libya could get worst?
A: Ofcourse it can get worse. It can turn into a civil war which can rage for a long time. I doubt it will, given the state of the world. But now we are having more and more social unrest, certainly we are going to have a lot of social unrest. The price of food is going up. When food prices go up, people get out agitated and they look for someone to blame.
Q: I recollect you stating in the month of January that crude may just surge all the way up to USD 150 per barrel, it is sort of getting there, Brent is now USD 106 per barrel, what is your estimate of how high crude could escalate, if the situation gets worse?
A: Certainly, it can go to USD 150 per barrel over the next decade. I have no idea what will happen this year. If Libya calms down and everybody else does, it will go down for a while. If the UK goes bankrupt or some sudden surprise happens, everything will go down. But crude oils is going to go over USD 150 per barrel, it is going to go to a couple of 100s in the next decade.
Q: What, according to you, is a good investment right now; do you think that investors should turn bullish towards precious metals to hedge their bets at this point in time?
A: Firstly, I have started looking at shorting US government bonds. I think they are turning into a real bubble because of this situation in the Middle East. People are flooding into US government bonds, which is a mistake. I have bought a small tractor company in Japan today because they are starting to infuse huge amounts of money in Japan trying to solve their agricultural problems. I am bullish on agriculture, I am bullish on all commodities.
Monday, August 23, 2010
Crude Oil Prices Resume Drop on Continuing Recession
Contrary to media assertions, the recession continues and that is starting to weigh on the price of oil as it dropped to a six-week low on Friday, and will plunge again after the Labor Day weekend.
The problem is the so-called stimulus money is gone, which had masked the real condition of the economy, and that is causing the jobless claims numbers to rise to levels which reflect that, along with the falling manufacturing numbers, as represented by the release of the general economic index by the Federal Reserve Bank of Philadelphia, which showed a plunge of 7.7 percent this month.
Again, while seeming to be a contraction, things are just returning to what they've in reality been since the recession began as the stimulus money effects leave the economy.
The government and Federal Reserve were hoping to buy time through spending the hundreds of billions so the private sector could rebound and take their place as creators of jobs and economic growth.
But the stimulus produced a false signal which had CEOs even hailing the economic turnaround, when they were in fact the beneficiaries of taxpayer dollars, rather than demand from the marketplace.
No matter how you look at it though, we're in for a rough ride economically, as there's nothing out there to indicate we're even close to beginning a recovery, and in fact the failure of government interference is being revealed publicly to all, yet the Federal Reserve has give us their assurance they're ready to do and spend what it takes to shore up the recessionary economy again, which will cause even more devastation over the long term.
Crude oil prices and inventory are predictably responding, as the oil inventory of the U.S. surged to its highest level since 1990, according to an Energy Department report.
That means consumers are staying close to home and continuing to cut back on spending.
When taking into account the fundamentals, crude oil prices are still considered too high, and the possibility of increased demand is falling by the wayside. Nothing indicates that will change anytime soon.
In other ominous and understated economic news, Axel Weber, a council member of the European Central Bank, said the European economy may need intervention from the central bank through the end of 2010. That's not surprising, as there was no way the sovereign debt crisis, which has largely been ignored by the media after it was allegedly taken care of, has been resolved, as the sheer size of the problem couldn't be taken care of with a few debt offerings, no matter what the size of them were.
While the austerity measures taken by some nations were a good move, it staggers the mind to think they could go back to throwing money out into the economy of the region through central banks, making the problem even worse than it is.
With oil prices looking to the economy to signal where things are at, the answer is it's in bad shape, with no prospects it's going to turn around in the near future.
That means consumption, at least in the U.S., the world's largest oil consumer, will continue to fall, and oil prices should follow that lead.
In the peak July traveling season, joblessness and higher gas prices held consumption down, keeping demand relatively unchanged at a time it should have been soaring. Gasoline deliveries even fell slightly from last year, averaging 9.257 million barrels in July 2010, in comparison to 9.26 million in July 2009.
Stockpiles in the U.S. rose to 1.13 billion for the week ending August 13, gaining 5.3 million.
The problem is the so-called stimulus money is gone, which had masked the real condition of the economy, and that is causing the jobless claims numbers to rise to levels which reflect that, along with the falling manufacturing numbers, as represented by the release of the general economic index by the Federal Reserve Bank of Philadelphia, which showed a plunge of 7.7 percent this month.
Again, while seeming to be a contraction, things are just returning to what they've in reality been since the recession began as the stimulus money effects leave the economy.
The government and Federal Reserve were hoping to buy time through spending the hundreds of billions so the private sector could rebound and take their place as creators of jobs and economic growth.
But the stimulus produced a false signal which had CEOs even hailing the economic turnaround, when they were in fact the beneficiaries of taxpayer dollars, rather than demand from the marketplace.
No matter how you look at it though, we're in for a rough ride economically, as there's nothing out there to indicate we're even close to beginning a recovery, and in fact the failure of government interference is being revealed publicly to all, yet the Federal Reserve has give us their assurance they're ready to do and spend what it takes to shore up the recessionary economy again, which will cause even more devastation over the long term.
Crude oil prices and inventory are predictably responding, as the oil inventory of the U.S. surged to its highest level since 1990, according to an Energy Department report.
That means consumers are staying close to home and continuing to cut back on spending.
When taking into account the fundamentals, crude oil prices are still considered too high, and the possibility of increased demand is falling by the wayside. Nothing indicates that will change anytime soon.
In other ominous and understated economic news, Axel Weber, a council member of the European Central Bank, said the European economy may need intervention from the central bank through the end of 2010. That's not surprising, as there was no way the sovereign debt crisis, which has largely been ignored by the media after it was allegedly taken care of, has been resolved, as the sheer size of the problem couldn't be taken care of with a few debt offerings, no matter what the size of them were.
While the austerity measures taken by some nations were a good move, it staggers the mind to think they could go back to throwing money out into the economy of the region through central banks, making the problem even worse than it is.
With oil prices looking to the economy to signal where things are at, the answer is it's in bad shape, with no prospects it's going to turn around in the near future.
That means consumption, at least in the U.S., the world's largest oil consumer, will continue to fall, and oil prices should follow that lead.
In the peak July traveling season, joblessness and higher gas prices held consumption down, keeping demand relatively unchanged at a time it should have been soaring. Gasoline deliveries even fell slightly from last year, averaging 9.257 million barrels in July 2010, in comparison to 9.26 million in July 2009.
Stockpiles in the U.S. rose to 1.13 billion for the week ending August 13, gaining 5.3 million.
Monday, August 16, 2010
Freeport (NYSE:FCX) Up as Goldman (NYSE:GS) Reiterates "Overweight" on Commodities
Shares of Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) are up today as Goldman Sachs (NYSE:GS) reiterated its "Overweight" rating on commodities.
Freeport rose to $71.08, gaining $1.01, or 1.44 percent as of 2:28 PM EDT.
The dollar also fell today, helping the price of copper push up. Orders which will draw metal from stockpiles also rose to a two-month high.
Dropping almost 1 percent today was the U.S. Dollar Index, which tracks a basket of six currencies against the strength of the greenback.
Besides copper, other metals Goldman Sachs likes are gold, oil, platinum and zinc.
Freeport rose to $71.08, gaining $1.01, or 1.44 percent as of 2:28 PM EDT.
The dollar also fell today, helping the price of copper push up. Orders which will draw metal from stockpiles also rose to a two-month high.
Dropping almost 1 percent today was the U.S. Dollar Index, which tracks a basket of six currencies against the strength of the greenback.
Besides copper, other metals Goldman Sachs likes are gold, oil, platinum and zinc.
Friday, August 6, 2010
BP (NYSE:BP) To Make Billions Off Remaining Oil?
Now that the end is coming as far as permanently plugging the oil well, the question needs to be asked as to what to do with the remaining oil, which estimated at about 45,000 barrels. That would generate close to $3.7 billion at current market prices, and more if oil prices continue to rise.
The attempt is already being made to make it sound controversial if BP somehow taps into the oil or sells the oil well to another company in order to generate revenue.
But the issue is simpler than that: do we waste that many barrels of oil for no reason? Now that the well is safely plugged, why waste that much oil?
Some ridiculous comments are already being made that oil from the site shouldn't be used commercially, as if it's some type of holy site or shrine. It's a place to access oil for millions of people to use for their needs. To let it sit and waste underneath the Gulf of Mexico would be a crime, and poor management of our resources.
There is the possibility BP may want to leave the well as it is with the top kill, as it will hold the oil in and leave it available for access in the future.
You can be sure there are conversations with government officials about this, as the waste of 45,000 barrels and the use it could get, jobs it would create, and money it would make, all make it in the best interest of Americans to have the oil be extracted from the well and used.
To think differently would be naive. What's being weighed is how deep the political fallout would be if it was to go forward.
This is why second thoughts have been thrown out be BP about the pumping of cement and mud into the well using the relief well. As once it's completed, there is no way to be able to access the oil.
At minimum, I would think they're at least considering selling the existing well to another company in order to have the oil not go to waste, and to make it more palatable to those who would strongly oppose BP retaining possession and resuming drilling.
How government officials, especially, respond to these questions will determine whether or not it's something that's in the works or not.
The attempt is already being made to make it sound controversial if BP somehow taps into the oil or sells the oil well to another company in order to generate revenue.
But the issue is simpler than that: do we waste that many barrels of oil for no reason? Now that the well is safely plugged, why waste that much oil?
Some ridiculous comments are already being made that oil from the site shouldn't be used commercially, as if it's some type of holy site or shrine. It's a place to access oil for millions of people to use for their needs. To let it sit and waste underneath the Gulf of Mexico would be a crime, and poor management of our resources.
There is the possibility BP may want to leave the well as it is with the top kill, as it will hold the oil in and leave it available for access in the future.
You can be sure there are conversations with government officials about this, as the waste of 45,000 barrels and the use it could get, jobs it would create, and money it would make, all make it in the best interest of Americans to have the oil be extracted from the well and used.
To think differently would be naive. What's being weighed is how deep the political fallout would be if it was to go forward.
This is why second thoughts have been thrown out be BP about the pumping of cement and mud into the well using the relief well. As once it's completed, there is no way to be able to access the oil.
At minimum, I would think they're at least considering selling the existing well to another company in order to have the oil not go to waste, and to make it more palatable to those who would strongly oppose BP retaining possession and resuming drilling.
How government officials, especially, respond to these questions will determine whether or not it's something that's in the works or not.
Wednesday, July 7, 2010
Is Noble Corp (NYSE:NE) a Buy?
An interesting story is emerging with oil services companies, and it's not Transocean (NYSE:RIG), which while down in price and P/E, are still exposed to the Gulf oil spill, and depending on what is found out as to the cause of the explosion and resultant leak, won't be cleared of the cloud overhanging them.
One of their major competitors, Noble Corp (NYSE:NE), has evidently been lumped together with the oil industry exposed to the Gulf, although there is no connection or exposure they have to it situation.
But incredibly their P/E is lower than Transocean's, standing at 5.07 as I write. Transocean's P/E is at 5.28.
To me the entire question is what is the rest of the summer going to be like as far as travel goes, as gas prices are already dropping after the Fourth of July weekend.
Many think this is going to be a slow summer for travel, based on the poor economic conditions in the U.S. and other parts of the world, which will keep people from spending in a big way.
So depending on whether or not you think gas and oil prices are going to rise, will determine if Noble is a buy to you.
I think it is a stock that must be watched though, and it has no reason to be where it's at, and has a lot of upside potential.
One of their major competitors, Noble Corp (NYSE:NE), has evidently been lumped together with the oil industry exposed to the Gulf, although there is no connection or exposure they have to it situation.
But incredibly their P/E is lower than Transocean's, standing at 5.07 as I write. Transocean's P/E is at 5.28.
To me the entire question is what is the rest of the summer going to be like as far as travel goes, as gas prices are already dropping after the Fourth of July weekend.
Many think this is going to be a slow summer for travel, based on the poor economic conditions in the U.S. and other parts of the world, which will keep people from spending in a big way.
So depending on whether or not you think gas and oil prices are going to rise, will determine if Noble is a buy to you.
I think it is a stock that must be watched though, and it has no reason to be where it's at, and has a lot of upside potential.
Friday, July 2, 2010
Oil Prices Fall Before Busy Holiday Weekend
For the fourth day in a row, oil prices fell on Thursday, as concerns over the economy could keep people closer to home, not only on this busiest of summer travel times, but throughout the rest of the summer as well.
There's really little to justify any optimism in the economic conditions we face, a the majority of economic data confirms we're either slowing down in growth, or, which is more likely, really never experienced any real growth, other than the government printing money and artificially propping up certain segments of the market in hopes it would buy enough time for a recovery to happen.
The government has lost that bet, and consumers know they need to be careful how they spend their money in light of economic uncertainties, which continue on.
New housing starts have plummeted, construction is down, jobless claims are up and homebuyers signing contracts also dropped in May, confirming fears of how shaky the economy really is.
Travel is one of the few things consumers can manage, and we're probably going to see a lot less of it this summer season, and oil prices will remain under downward pressure as a result.
There's really little to justify any optimism in the economic conditions we face, a the majority of economic data confirms we're either slowing down in growth, or, which is more likely, really never experienced any real growth, other than the government printing money and artificially propping up certain segments of the market in hopes it would buy enough time for a recovery to happen.
The government has lost that bet, and consumers know they need to be careful how they spend their money in light of economic uncertainties, which continue on.
New housing starts have plummeted, construction is down, jobless claims are up and homebuyers signing contracts also dropped in May, confirming fears of how shaky the economy really is.
Travel is one of the few things consumers can manage, and we're probably going to see a lot less of it this summer season, and oil prices will remain under downward pressure as a result.
Tuesday, May 25, 2010
Exxon (NYSE:XOM), Chevron (NYSE:CVX) Down on Lower Oil Prices
The price of oil futures plunged below the $69 a barrel mark to close the day at $68.75 a barrel, dropping as low as $67.15 a barrel. Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) closed down as well, moving in unison with oil prices today.
Exxon Mobil dropped 48 cents, or 0.8 percent, to $59.71, while Chevron was down 87 cents, or 1.2 percent, to $72.57.
Volume was high for both companies, with 22,308,218 Chevron share changing hands, in contrast to the 3-month average of 10,814,000. Exxon Mobil surged to 50,536,767 shares being exchanged, against the 3-month average of 28,592,600.
The Dow Jones Industrial Average declined by 22.82 points, to finish at 10043.75, a 0.23 percent drop.
Exxon Mobil dropped 48 cents, or 0.8 percent, to $59.71, while Chevron was down 87 cents, or 1.2 percent, to $72.57.
Volume was high for both companies, with 22,308,218 Chevron share changing hands, in contrast to the 3-month average of 10,814,000. Exxon Mobil surged to 50,536,767 shares being exchanged, against the 3-month average of 28,592,600.
The Dow Jones Industrial Average declined by 22.82 points, to finish at 10043.75, a 0.23 percent drop.
Friday, April 16, 2010
Oil Drops on Goldman Sachs (NYSE:GS) Fraud Charges
Oil falls on news of fraud charges against Goldman Sachs
It seems almost everything responded negatively to the news Goldman Sachs (NYSE:GS) was being charged with fraud by the Securities and Exchange Commission, including crude oil, which dropped by $2.70 to $82.81 a barrel on the NYMEX.
Equities and other commodities fell as well, with gold prices getting hit hard, dropping by over $24 in mid-day trading.
In what appears to be an over-response to the relatively benign situation, it tells me traders know the market is flying way too high, and with commodity prices, for the most part, at very high levels as well, anything that spooks traders and investors seems ready to put heavy downward pressure on the markets.
Investors are getting leery of the optimism being portrayed by the media concerning the markets, and they know much of it is hype and not based on fundamentals, and the market is poised for a heavy correction, as evidenced by the response to something that shouldn't be taken as that big of a deal.
It seems almost everything responded negatively to the news Goldman Sachs (NYSE:GS) was being charged with fraud by the Securities and Exchange Commission, including crude oil, which dropped by $2.70 to $82.81 a barrel on the NYMEX.
Equities and other commodities fell as well, with gold prices getting hit hard, dropping by over $24 in mid-day trading.
In what appears to be an over-response to the relatively benign situation, it tells me traders know the market is flying way too high, and with commodity prices, for the most part, at very high levels as well, anything that spooks traders and investors seems ready to put heavy downward pressure on the markets.
Investors are getting leery of the optimism being portrayed by the media concerning the markets, and they know much of it is hype and not based on fundamentals, and the market is poised for a heavy correction, as evidenced by the response to something that shouldn't be taken as that big of a deal.
Thursday, April 15, 2010
OPEC May Increase Production if Oil Prices Go Over $100 a Barrel
OPEC May Increase Oil Production if Prices Go Over $100 a Barrel
OPEC will change its production levels if the price of oil goes above $100 a barrel, said Kuwaiti Oil Minister Sheikh Ahmad Abdullah al-Sabah today.
Even so, Sheikh Ahmad that considerations would have to be taken into account concerning supply and demand when making decisions.
For now, oil prices at about $85 a barrel are considered a good price by OPEC, and that isn't anticipated to change much, although some think it'll go much higher as the summer period comes.
I don't think so though, as the so-called recovery isn't really one, as data continues to come out showing increased loss of jobs and foreclosures.
That will keep oil demand from rising, along with oil prices.
OPEC will change its production levels if the price of oil goes above $100 a barrel, said Kuwaiti Oil Minister Sheikh Ahmad Abdullah al-Sabah today.
Even so, Sheikh Ahmad that considerations would have to be taken into account concerning supply and demand when making decisions.
For now, oil prices at about $85 a barrel are considered a good price by OPEC, and that isn't anticipated to change much, although some think it'll go much higher as the summer period comes.
I don't think so though, as the so-called recovery isn't really one, as data continues to come out showing increased loss of jobs and foreclosures.
That will keep oil demand from rising, along with oil prices.
Monday, April 5, 2010
Goldman Sachs (NYSE:GS) Oil Nearing $100
Oil Prices Going Up
Goldman Sachs (NYSE:GS) has stated they believe oil prices will increase to the $92 to $97 range in the next six months, and even possibly reach it in the next 90 days.
The reasoning behind the assertion is their belief demand will pick up to the place of supply not being able to meet it.
Bank of America thinks it'll get worse than that, with prices getting as high as $110 for oil, and possibly even going as high a $150 before the end of the year.
The only caveat I have with that is if people are really ready to open their wallets and start traveling in a way that would generate that type of demand. We'll see in a couple of months.
Oil Prices Going Up
Goldman Sachs (NYSE:GS) has stated they believe oil prices will increase to the $92 to $97 range in the next six months, and even possibly reach it in the next 90 days.
The reasoning behind the assertion is their belief demand will pick up to the place of supply not being able to meet it.
Bank of America thinks it'll get worse than that, with prices getting as high as $110 for oil, and possibly even going as high a $150 before the end of the year.
The only caveat I have with that is if people are really ready to open their wallets and start traveling in a way that would generate that type of demand. We'll see in a couple of months.
Oil Prices Going Up
Wednesday, March 31, 2010
Bank of America (NYSE:BAC): Oil at $90 a Barrel
Will oil reach $90 a barrel in 2010?
Bank of America (NYSE:BAC) say they see oil reaching as high as $90 a barrel before the end of 2010, although others believe prices will stay close to where they're at today for the remainder of the year.
Of course most of this is all speculation, as we need to wait to see whether Americans loosen up their wallets in the summer months and travel more, or decide to stay closer to home. Much will depend on that as to the demand oil will have.
Some reasons cited for prices remaining lower is the large global supply and probable lower demand will keep prices in check.
It's possible prices could even fall in the summer months, again, depending on the traveling habits of consumers.
Bank of America (NYSE:BAC) say they see oil reaching as high as $90 a barrel before the end of 2010, although others believe prices will stay close to where they're at today for the remainder of the year.
Of course most of this is all speculation, as we need to wait to see whether Americans loosen up their wallets in the summer months and travel more, or decide to stay closer to home. Much will depend on that as to the demand oil will have.
Some reasons cited for prices remaining lower is the large global supply and probable lower demand will keep prices in check.
It's possible prices could even fall in the summer months, again, depending on the traveling habits of consumers.
Friday, March 26, 2010
Oil Prices Drop to $80 A Barrel
Oil prices down
Oil prices dropped 53 cents to end the session at $80 a barrel, ending the week down 2 percent.
Uncertainty about whether we're really pulling out of the recession continue to weigh on the minds of investors, and that has had an impact on oil prices which have been trading in a tight range recently because of no clues as to where things are headed economically.
While no clear direction remains, we'll continue to find oil reacting in this manner.
Oil prices dropped 53 cents to end the session at $80 a barrel, ending the week down 2 percent.
Uncertainty about whether we're really pulling out of the recession continue to weigh on the minds of investors, and that has had an impact on oil prices which have been trading in a tight range recently because of no clues as to where things are headed economically.
While no clear direction remains, we'll continue to find oil reacting in this manner.
Friday, March 19, 2010
Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX) Drop as Oil Falls
Exxon Mobil, Chevron Down with Oil Futures
Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) dropped in early trading as crude oil futures fell below $81 a barrel.
This wasn't a complete surprise, as it seems the market was looking for an excuse for a breather after a week of moving upward.
Pressures also came from ongoing concerns over Greek sovereign debt and the Reserve Bank of India surprisingly increasing its repurchase rate to 5 percent, something that caught the markets off guard.
Worries are circulating that China could be next in line to make a similar move.
Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) dropped in early trading as crude oil futures fell below $81 a barrel.
This wasn't a complete surprise, as it seems the market was looking for an excuse for a breather after a week of moving upward.
Pressures also came from ongoing concerns over Greek sovereign debt and the Reserve Bank of India surprisingly increasing its repurchase rate to 5 percent, something that caught the markets off guard.
Worries are circulating that China could be next in line to make a similar move.
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