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Showing posts from July, 2015

Supply Data, Tragedy of the Commons

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As investors await supply news from the Energy Information Administration, crude prices oscillated between gains and losses. After opening at $48.83, prices peaked at $49.33 on a decline in crude production was revealed yesterday, but as the market closes, the WTI spot seems to be settling at a loss around the $48.50 price level. Although the benchmark will most likely fail to move more than 1% in either direction, analysts will wonder why supply data had little effect on the movement. As reported by the EIA, crude production was reduced by 145,000 barrels over the past week, and this was accompanied by an announcement that the Saudi's would cut back production at the end of the summer. Nevertheless, the domestic report also noted that rig utilization decreased, but only by 0.4% still maintaining capacity as high as August of 2014. Likewise, 2015 third quarter capacity utilization remains above 95% in attempt to surpass third quarter levels in 2014 which averaged out to be 93.2%.


Schlum' in the Slump

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In an oil slump, I have constantly stated and restated the importance of finding winners in the muck of low revenue and dipping profits. Especially in the exploration and operation sector, the key to solid financials is established infrastructure and a diversified base. One company that has stuck out in the year of 2015 is Schlumberger Limited based in Paris, France and traded on the New York Stock Exchange. Stretching across 85 countries, SLB's almost imperialistic hold on their operations is impressive. With their specialization in technological breakthroughs, project management, and tireless exploration, no company has success entrained in their methods more than the French corporation. As of today, its stock jumped $1.39 to $83.89 for a 1.68% gain on the day, a likely reaction to a positive movement in crude oil prices. This jump came during a turbulent time for the oil industry as drops in revenue threaten profitability with low prices, but SLB's earnings revealed what a …

The Earnings Week

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Halfway through the year of 2015, the United States stock market faces weak price trends that fail to reveal any information about the tottering state of the economy. Janet Yellen sits at the helm of the Federal Reserve eyeing the lever that will hike interest rates, but many have reservations. A stuttering Chinese stock market threatens a slip in world growth. Consequently, global oil demand dampens despite incredibly low oil prices. Oil companies, energy investors. and commodity traders look at sub-$50 prices and scratch their heads when reminiscing a year earlier. On July 28, 2014, WTI crude climbed to a weekly high of $105.68. With revenues strong and consumers wincing at the pump, the market followed with a 50% decrease due to a supply glut. Today, a small climb relieves some pressure from ravaged revenue and pumping that refuses to stop. The New York Mercantile Exchange closes at $47.77 posting a price drop of -54.8% in the matter of a year. The chart below describes it all from…

A New "Era"

Decades are a peculiar thing. Every ten years, historians bolstered by media package the time that has passed and choose a unique name for the so-called era. The years of 1920-1929 were deemed the "Twenties," as a way to segregate those years of prosperity with the horrible "Thirties" of the Great Depression. Consequently, the "Fifties," the "Sixties," and the "Seventies are all characterized by their postwar days of the Cold War and technological change. The numbers we assign years continue to define history, and nobody decides to ask the question why or assert the point that the onset of a new year, a new ten years, or even a new century is nothing but a continuance of time. Decades and centuries don't exist as much as our fabrications of eras divvy up time like a master sous chef parsing a long carrot into equal sections. Anyway it's sliced, it's still carrot and it's still time. But why all the boredom with time and carr…

Needling through the Haystack

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For stock investors looking at oil companies to invest in, strong financials can be hard to find amidst a crisis of low oil prices. Often times, it's tempting to take a short position and make profits on small drops in prices. Volatility and bad sentiment threaten any hopes of finding a long position, but that doesn't have to be the case. Value can be found in some securities who show strong financials, especially after quarterly reports are released.The companies that have strategic executives and established infrastructure can beat their peers in a slump, then explode with growth as prices rise again. Any investor that can find a blue chip covered in the dust of job cuts, low revenue, and high debt has the potential to make a lot of money on a long position during troubled times.
In my analysis, I will differentiate potential value stocks by their respective market capitalization. Stocks with different market cap, or market share, tend to act differently. For example, Google…

The Benchmarks

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When one pictures an oil well or an oil rig, images of fountains of black liquid in the desert raining upon crowds of rig workers, and just like that, the business suits overseeing them suck up every ounce to exchange barrels of the stuff for stacks of cash. For some, it may be the teeter-totter motions of a pumpjack rocking beside the highway. Despite the fantasy, crude oil as a basic commodity is obviously more complicated than that, but the common psychological predispositions towards oil and its extraction often creates an ignorance to the kinds of oil, how it is extracted, and where it comes from. Even some traders in the industry take for granted the knowledge of being able to distinguish between the West Texas Intermediate Crude Oil benchmark and the Brent Crude Oil benchmark in their investment decisions. So it might seem basic, but it's a necessary education into which I choose to delve.

Crude oil, petroleum is a fossil fuel found below the upper crust of the earth. There…

Greece and Supply Declines, Iranian Deal

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Introductions are always hard. Introductions are especially hard when the topic you write about is in the midst of historic movement, volatility that has investors worried and excited at the same time. Crude oil stocks continue to reflect the wacky structure of a roller coaster which usually starts off with a large drop (no coincidence), light heads, and heavy stomachs. But this is the introduction to my blog nonetheless. Here, I will analyze report, comment, and research. Let's get to it then.

The past week has brought a new low to Brent and WTI crude oil prices. During a "crisis" of demand and supply forces about a week ago, market forces meshed together to push prices to lows of $51.80 (WTI) on July 8th and $57.03 (Brent) on July 6th. Although the prices experienced a small rebound the following day, there is no doubt that a new support level has been created at a price plus or minus $0.10 from the respective lows. Investors will surely be looking, if not imploring fo…