- Thus far, the Dow has climbed 10.1% from its Dec. 24 low, while the S&P 500 has gained 10.4% from that Christmas Eve low, when stocks put in the worst trading action on the trading day before Christmas on record.
- A partial government shutdown, Treasury Secretary Steven Mnuchin’s questions about banks’ health and signals that President Donald Trump could fire Federal Reserve Chairman Jerome Powell upset markets on Monday, sending the Dow down. After markets tanked on Christmas Eve, Trump said Tuesday that he remains confident in Mnuchin, renewed his criticism of the Fed, accusing it of hiking rates too fast.
- The stock market has reached a bottom following a tumultuous 10 weeks that’s seen the S&P 500 in and out of correction territory. Others have predicted a rally of up to 10 percent in the next 30 days. One investment strategist is standing by his 2,850 year-end S&P 500 price target, “A lot can happen in a month.”
- Renowned oil trader Andy Hall says he would bet that crude prices are more likely to go up than down following a collapse over the last two months. A correction like the one gripping the market tends to trim supplies and boost demand.
- The stock market is setting up for another rally, according to Elliott Wave theory. As long as the S&P 500 holds 2,640 points, the index could rise to over 2,800
- Cramer’s Conclusion? Don’t buy tech ETFs, buy winners. Yes, it is time for single-stock rewards. To understand the potential basis for a tech rally, we have to understand why we had a tech wreck to begin with. “I think the CPU shortages and the lack of investment say it’s time to buy — and for the first time in ages.”
- “We are going to start getting into this oversold territory. You’re going to see the buyers coming in and starting to pick up some bargains.” If trade doesn’t improve, and if the yield curve keeps flashing yellow or red, there’s still one point of optimism; the selling has to stop at some point. Here are some potential bargains.
- Previous: Is the Stock Market Going Up or Down? Lets Break Down Some Components.
- Previous: Are Markets Pricing in a Global Slowdown?
- Previous: Is Fed Tightening Going to Cause a Recession? Many Experts Think Yes!
- Crude market volatility has soared in the second half of 2018, with prices touching a four year high before entering their longest losing streak in three decades. Analysts were calling for $100 oil but now seem to think prices will head as low as $40.
- Rising oil prices are prompting forecasts of a return to $100 a barrel for the first time since 2014, creating both winners and losers in the world economy.
- Oil and Gold prices are ‘extremely attractive. Forecast of returns in Oil of about 17 percent in the coming months, current situation as unsustainable, and this week’s G-20 meeting in Buenos Aires as a potential turning point.
- The global decline rate of existing fields is around 5%, which means that we lose about 4.6 million barrels per day of production capacity each year. Additional shale production is putting a burden on a select few places, which is increasingly difficult. The scheduled capacity additions between 2019 and 2022 are between 1.1 mmbpd and 1.5 mmbpd annually. That is well short of anticipated production decline.
- The U.S. became the swing producer in the world, both on the downside and the upside, driven by a very attractive return on investment. They will actually cut back on capex when prices drop. But conversely when oil rises, they can drill more and all the oil comes online relatively quickly.
- Previous: Oil Prices In First Days of Iran Sanctions with A Bear Market, What’s Next?
- Previous: Hidden Factors Driving these Markets: Natural Gas up 40% and Oil Down 20%
- The surprise drop in equity markets and rise in Natural Gas led to margin calls which may have forced the hedge funds to dump profitable crude oil positions in order to raise much needed cash. This changed what was a normal oil correction intro a route.
- Traders made a pair trade, simultaneously going long oil futures, betting on a crude price rise, while shorting natural gas, or betting that prices of the fuel would fall. The opposite has taken place, and now those investors have been forced to unravel both ends of those trades as crude-oil prices have cratered.
- Selling by momentum traders produced a snowball effect for retreating oil prices. Traders sold into a gradually firming Oil market shorting Natural Gas. This trade worked for years. When the trades started failing they had large margin calls, causing a collapse.
- Natural gas soared the most in nine years on forecasts for a lingering U.S. cold spell. The cold temperatures spurred concern that supplies may not be adequate to meet demand over the winter.
- Investors have gone from contemplating the prospect of oil at $100 to sub-$50 in less than two months. Stocks and Bonds to currencies, assets worldwide are gripped by oil’s largest one-day drop in three years.
- Previous: Oil Prices In First Days of Iran Sanctions with A Bear Market, Whats Next?
- The Trump administration reinstated sanctions on Iran’s energy, banking and shipping industries. Washington granted temporary waivers to eight countries, including China and India, the biggest purchasers of Iran’s oil.
- The exemptions have been granted for 180 days, and will be reviewed toward the end of the period. China Waiver: 360,000 b/d. Purchases before sanctions: 658,000 b/d in Jan.-Sept. 2018
- Saudi Arabia has enough spare capacity to cover for any shortfall related to Iran, although any further unexpected outages – from, say, Venezuela, Libya or Nigeria – would test the cartel’s abilities. Saudis indicated a price level of approx. $80 per barrel is comfortable, and would target this price level.
- Venezuela’s crude production was in “free-fall” and could soon fall below 1 million barrels per day.
- The EIA expects U.S. crude oil production will average 10.9 million barrels per day (b/d) in 2018, up from 9.4 million b/d in 2017.
- Previously: American Shale Oil: Real Long Term Growth or Does History Repeat Itself with Boom then Bust?
- Is The Shale Slowdown Overblown? As the Permian runs into trouble, shale companies are pivoting to the Eagle Ford, the Bakken, the Niobrara and even Wyoming’s Powder River Basin.
- The oil industry, and particularly the Permian, is in the midst of a boom. New hints that maturing wells are falling well short of projections are prompting fresh worries that the industry may not be able to meet robust demand moving forward.
- Shale has thus lost some momentum at a time when investors have again found an appetite for the offshore domain, stimulated by a steep reduction in offshore costs and breakeven levels, which in turn have been driven by favorable unit prices.
- Technology and Efficiency helped raise U.S. production since 2016 and that has been achieved with an active rig count that is about 40% lower than it was just a half-decade ago.
- Production is still rising, but the crowded field is increasingly pushing shale E&Ps onto the periphery. The result is that the average well in the Bakken is producing less oil at its peak performance, as fringe areas are dragging down the average.
This week’s bond issuer is a company entrenched in production and transportation of natural gas. CSI Compressco’s (CCLP) first and second quarters have been outstanding, both recording consecutive increases in revenues. The oil and gas industry’s activity level has been steadily increasing over the past 18 months and CCLP has started to see the effects of this on all three of its business segments – Compression Services, Aftermarket Services, and Equipment Sales. Its second quarter results gives investors reason to look twice at this natural gas services company.
Q2 revenues increased 33% year-over-year, and 17% over Q1 2018.
Adjusted EBITDA increased 21% over Q1 and 19% year-over-year.
Compressions Services increased gross margin by 460 basis points.
At the conclusion of Q2, new equipment sales had generated a backlog of $102 million, revenue to be recognized later this year and the first half of 2019.
This week, Durig Capital looks again at Parker Drilling, a company that provides contract drilling / drilling related services and rental tools to the oil industry. (Durig Capital reviewed Parker Drilling in June 2015). Having survived the unprecedented declines in oil prices over the past three years, Parker Drilling has emerged as a leaner, more competitive company. Its most recent quarterly results show a company that continues to perform.
Q2 adjusted EBITDA growth of 39% year over year.
Consecutive quarterly revenue growth of 8.1%.
Gross margin as a percentage of revenues increased to 22.8%, up from 16.5% in Q1.
Q2 interest coverage ratio of 2.4x.