Showing posts with label Drilling. Show all posts
Showing posts with label Drilling. Show all posts

Saturday, October 14, 2023

Is Exxon Mobil Gearing up to Become the #1 Energy Stock?

The American shale industry is a testament to the inventive spirit of grassroots capitalist enterprise. This sector was revolutionized by innovative frackers, who introduced groundbreaking methods of horizontal drilling and oil extraction from rock formations.

However, not all major oil companies rushed to capitalize on the shale boom with the same zeal. Global oil giant Exxon Mobil Corporation (XOM) cautiously approached the rich shale territory, such as the Permian basin, due to the reckless expansionism of the wildcatters, consequently burning billions of investors' funds....Continue Reading Here.

Thursday, October 15, 2020

Crude Oil Stalls in Resistance Zone

Clear Price Channel May Prompt Big Breakout or Breakdown Move in Oil

In this report, we discuss the recent price action in crude oil and how economic conditions and the pennant flag chart pattern is indicating a big price move is about to take place over the next few weeks. While some of you may want a clear, bold prediction as to whether a breakout or breakdown may happen, as technical traders, our job is to predict different possible setups and identify the criteria that will tell us when to enter the trade upon confirmation.

Crude Oil has continued to retest the $41.75 to $42.00 resistance level over the past 30+ days. My research team believes this represents a very clear indication that further failure to advance above this level will prompt a moderate price decline – likely breaking below the $36.00 ppb price level.

We believe the completed Pennant/Flag Apex, highlighted in Light Green on the Crude Oil Futures chart below, represents a technical pattern suggesting a new price trend is pending. The recent sideways price action, highlighted by the Gold Rectangle on this chart, shows the range of price recently that is currently presenting a very clear support level (near $36) and a very clear resistance level (near $42)....Continue Reading Here.



Stock & ETF Trading Signals

Thursday, April 23, 2020

Our MarketClub Members Bailed Before Crude Oil Went Negative

If the world wasn't strange enough right now, the crude oil market just took it up a notch. On Monday, April 20, 2020, the May contract for WTI Crude Oil fell to negative $37/barrel, bizarre territory after a record breaking price drop.

Futures traders are rightfully concerned about decreased demand, overproduction, and limited storage space. MarketClub members were thankfully sitting on the sidelines (or were riding the move down) after getting an exit signal for this liquid energy fund.


What’s the Next Move for USO?

MarketClub members have the Chart Analysis Score at their fingertips. If and when the USO trend reverses, members will see the score increase and will receive Trade Triangle signals as the ETF establishes new short term, intermediate, and long-term bullish trends.

Want the score and signals for USO or any other energy stock or ETF?

Join MarketClub now and get immediate access!



Thursday, April 11, 2019

Are You Ready For The Next Move in Natural Gas?

Historically, April has been a pretty consistent upside opportunity in Natural Gas for over 20 years. Over the past 24+ years, the upside opportunity in Natural Gas has been accurate over 68% of the time with the average upside potential ranging from $0.60 to $0.85. With Natural Gas sitting down near recent lows and seeing as though we are still fairly early in the month of April, our researchers believe the opportunity still exists for some quick profits in UNG with an upside move from below $23.95 to a target level of $26 to $28 (roughly +9 to +18%).

The downside risk is rather limited with clear support visible below the recent lows (near $22.75) and a historical likelihood of any further downside price swing being below 33%. Our research team believes an opportunity to establish new longs in UNG below the current Daily price gap (below $23.50) would be ideal.



Historical data mining shows that average upside rallies at this time of the year are typically ranging just below $1. Thus, the upside potential for this move being about +9 to +12% should be sufficient for quick profits. Skilled traders can hold a small portion of the trade for any potential run beyond these initial target levels, but we caution traders that $28.50 to $29.00 is an area of strong resistance. Our last trade in natural gas with subscribers netted us 30% profit in UGAZ within 10 days back in February.

Our research team is still waiting for the Daily Upside Gap to fill with prices below $23.50 before we look to enter any new trades. We have been patiently waiting for the bottom in Natural Gas to form knowing that we have this trade setup with a relatively high success rate. Keep an eye on Natural Gas and look for any good entries below $23.50 in UNG – the deeper the better. Our Fibonacci modeling systems are already suggesting a bottom has set up and any upside price move above $24.30 will likely prompt a bigger rally towards $26 to $28.

Are you ready for this next move? Want to know how we can help you find and execute better trades? 55 years of combined experience in researching and trading makes analyzing the complex and ever-changing financial markets a natural process. We have a simple and highly effective way to provide our customers with the most convenient, accurate, and timely market forecasts available today. Our stock and ETF trading alerts are readily available through our exclusive membership service via email and SMS text.

Our newsletter, Technical Trading Mastery book, and Trading Courses are designed for both traders and investors. Also, some of our strategies have been fully automated for the ultimate trading experience.

Chris Vermeulen



Stock & ETF Trading Signals



Tuesday, April 9, 2019

Crude Oil Nearing Resistance - Could a New Top Form Here?

The recent recovery in Crude Oil has, partially, been based on increasing expectations of a global economic recovery taking place and the continued news that the US/China will work out a trade deal. Crude inventories. Just last week U.S. Crude Oil inventories came in at +7.2 million barrels vs. expectations of -425,000 barrels. Additionally, concerns in Syria and Libya are pushing prices a bit higher as well. Whenever there are supply concerns or uncertainty out of this region, prices tend to rise.

The facts remain very dynamic for Oil. The U.S. is continuing to produce more and more oil and is expected to become a “net exporter” of oil this year. Economic issues will, eventually, resolve themselves, yet we don’t know the final outcome of these trade deals or how the economy will react to any milestones that are required within the final settlement. And, again, these continuing issues in Libya, Syria and near this region are likely to cause some increased levels of uncertainty over the next 60+ days.

Our researchers, at The Technical Traders, believe the $65.00 level will act as resistance to this current upswing. We believe the upside price move may continue to levels near $67.50 before weakening and beginning a topping formation. We believe our expectation that precious metals will bottom near April 21~24 is key to understanding the dynamics of this move in oil. As long as FEAR does not enter the market, then Oil will likely react to impulse factors exclusively related to oil. Once Gold breaks out above $1500 per ounce, our belief is that oil will react to fear factors related to some broader economic event driving investors into precious metals.

Therefore, we are urging traders to be cautious of the upside price swing in Oil at the moment. Yes, we believe the upside will continue for at least another 10~15 days (possibly changing direction near April 21~24). Yes, we believe current global dynamics support moderately higher Oil prices. Yet, we feel these factors may change within the next 20~45 days as we believe some increased fear levels are about to hit the global markets.



At this point, we would urge Bullish Oil traders to start to become more cautious of any downside risks and begin to prepare for increased volatility. We don’t have any real clue as to how this move will setup, but we do believe our other research support increased volatility within the Crude Oil markets and the potential for a new downside price swing before any further upside move sets up.

Please take a minute to review this research post from January 31, 2019 > Learning From our SP500, Gold and Oil Research & Profit.

We’ve recently launched a new technology solution for our members that delivers our incredible research and trading solutions. You can also visit The Technical Traders Free Research to learn more about our research team and past article. 20129 is going to continue to be an incredible year for skilled traders – you won’t want to miss these big moves that are setting up.

Chris Vermeulen


Stock & ETF Trading Signals

Tuesday, December 18, 2018

Natural Gas Breaks Lower Towards Our $3.00 Target

Just about seven days ago we alerted all of our followers to a massive breakdown move that was about to unfold in Natural Gas. At that time, we predicted the price of Natural Gas would break below $4.30 and fall quickly towards the $3.00 - 3.20 level. Taking a look at that call now, with the price below $3.60, it seems our analysis was perfectly timed.

This Daily Natural Gas chart highlighting our predictive Fibonacci price modeling system shows the downside price targets that are waiting to confirm price support and a potential “deep V bottom formation”. If you recall from our earlier research, we believe this downside move will end rather quickly with a deep V type of price bottom setting up near the end of 2018. This means we expect the price of Natural Gas to begin to rally into 2019 after reaching the $3.00 - 3.20 level soon.



This is an incredible move for skilled traders. We are watching a $2.50 price move in Natural Gas unfold right before our eyes – and it appears this rotation will complete before the end of February 2019. -$1.40 to the downside, then +1.20 to the upside. Just follow the predictive modeling systems and ride it out.

We’ll alert you when the bottom sets up and when the upside move it about to unfold, but for now, we are watching for NG to move into the support zone (near $3.20). Once that level is reached, a technical price bottom should start to set up and the new rally back towards $4.00 will likely start in early January 2019.

Want to learn how our advanced price modeling tools can make calls like this weeks and months in advance? Visit The Technical Traders to learn about our research, services, daily videos, and more solutions to help skilled traders stay ahead of these market moves. Our advanced predictive modeling solutions and years of market research provide our members with a clear advantage you won’t find anywhere else.

Consider joining our services as a Christmas Gift to yourself!

Chris Vermeulen
The Technical Traders



Stock & ETF Trading Signals

Monday, November 12, 2018

Will Crude Oil Find Support Near $60 Dollars

Our research team warned of this move in crude oil back on October 7, 2018. At that time, we warned that oil may follow a historical price pattern, moving dramatically lower and that lows near $65 may become the ultimate bottom for that move. Here we are with a price below that level and many are asking “where will it go from here?”.

We believe the support near $65, although clearly broken, may eventually become resistance for a future upside price move. Our proprietary Fibonacci price modeling system is suggesting a new target near $52.00 - $53.00 and we believe this downside move in crude oil is far from over at this point.



The current global climate for oil is that suppliers are pumping more and more oil into the market at a time when, historically, prices should continue to decline. One of our research tools includes the ability to identify overall bias models for each week, month or quarter. Historically, crude oil is dramatically weaker in the month of November and relatively flat for the month of December.

Analysis for the month of November = 11
    *  Total Monthly Sum : -44.52000000000001 across 36 bars

Analysis for the month of December = 12
    *  Total Monthly Sum : -0.699999999999922 across 36 bars

We believe the price of oil will continue to drift lower to target the $52.00 - $53.00 Fibonacci support level before attempting to find any real price support. This equates to an addition -6 to -8% price decline for skilled traders. We will alert you with a new research post as this downward price move continues or new research becomes available.

We have been calling these types of market moves all year and recently called the top in the U.S. equity markets nearly 40 days before it happened. Want to know what we think is going to happen for the rest of 2018 and into early 2019? Visit the Technical Traders Free Research to read all of our public research posts. Isn’t it time you invested in a team of researchers and tools to assist you in finding greater trading success?

Chris Vermeulen



Stock & ETF Trading Signals

Monday, October 8, 2018

Will Crude Oil Follow These Historical Patterns?

Our research team and partners at Technical Traders Ltd., has been very interested in crude oil recently as the current rally appears to have rotated lower near a top. Our predictive modeling systems, predictive cycle analysis and other tools suggest Oil/Energy may be setting up for a downward price trend. This may be an excellent opportunity for skilled traders to identify profitable trades as this trend matures.

This Daily Crude Oil Chart shows our Predictive Cycle Modeling system and shows the projected price cycles out into the future. One can see the downside projected price levels very clearly. This cycle analysis tool does not predict price levels, it just predicts price trends. We can’t look at this indicator and think that $72 ppb is a price target (near the right side). We can only assume that a downward price cycle is about to hit and use historical price as a guide to where price may attempt to fall to.


Using our adaptive Fibonacci price modeling tool, we can see from the chart below that downside price targets are currently near $72 ppb, $67 ppb and $65 ppb. Therefore, we believe the $72 price level will become the first level of support, where our price cycle tool suggests a small rotation may occur, and the $67 price level may become the ultimate downside target level.


We believe the current price rotation in Oil/Energy may be setting up for a decent downside price move with a lower price target at or below $67 ppb. Historical data shows that this type of price action, downward, at this time is historically accurate and predictable. If you want to know how you can profit from this move and learn how our research team continues to find and execute superior trades for our members, visit The Technical Traders to learn more.

Chris Vermeulen



Monday, November 20, 2017

Could a Bitcoin Blowout coincide with a Major Market Blowout?

Our team of researchers continues to attempt to identify market strengths and weakness in the US major markets by identifying key, underlying factors of the markets and how they relate to one another.

Recently, we’ve been warning of a potentially explosive bullish move in Metals and our last article highlighted the weakness in the Transportation Index as it relates to the US major markets. 

On November 2, 2017, we warned that the NQ volatility would be excessive and that any move near or below 6200 would likely prompt support to drive prices higher as our Adaptive Dynamic Learning model was showing wide volatility and the potential for rotation moves.

This week, we are attempting to highlight a potential move in Bitcoin that could disrupt the global economy and more traditional investment vehicles.  For the past few years, Bitcoin has been on a terror to the upside.  Recently, a 30% downside price rotation caused a bit of panic in the Crypto world.  This -30% decline was fast and left some people wondering what could happen if something deeper were to happen – where would Crypto’s find a bottom.  From that -30% low, Bitcoin has recovered to previous highs (near $8000) and have stalled – interesting.
While discussing Bitcoin with some associates a while back, I heard rumor that a move to Bitcoin CASH was underway and that Bitcoin would collapse as some point in the near future. The people I was meeting with were very well connected in this field and were warning me to alert me in case I had any Bitcoin holdings (which I do).  I found it interesting that these people were moving into the Bitcoin CASH market as fast as they could.  What did they know that I didn’t know and how could any potential Bitcoin blowout drive the global markets?
Panic breeds fear and fear drives the markets (fear or greed).  If Bitcoin were to increase volatility beyond the most recent move (-30% in 4 days) – what could happen to the Crypto markets if a bubble collapse or fundamental collapse happened?


How would the major markets react to a Crypto market collapse that destroyed billions in capital?  For this, we try to rely on our modeling systems and our understanding of the major markets.  Let’s get started by looking at the NASDAQ with two modeling systems (the Fibonacci Price Modeling System and the Adaptive Dynamic Learning system).
This first chart is a Daily Adaptive Dynamic Learning (ADL) model representation of what this modeling system believes will be the highest probability outcome of price going forward 20 days.  Notice that we are asking it to show use what it believes will happen from last week’s trading activity (ignoring anything prior).  This provides us the most recent and relevant data to review.
We can see from the “range lines” (the red and green price range levels shown on the chart), that upside price range is rather limited to recent highs whereas downside prices swing lower (to near 6200 and below) rather quickly.  Additionally, the highest probability price moves indicate that we could see some downside price rotation over the Thanksgiving week followed by a retest of recent high price levels throughout the end of November.


This NQ Weekly chart, below, is showing our Fibonacci price modeling system and the fact that we are currently in an extended bullish run that, so far, shows no signs of stalling.  The Fibonacci Price Breach Level (the red line near the right side of the chart) is showing us that we should be paying attention to the 6075 level for any confirmation of a bearish trend reversal.  Notice how that aligns with the blue projected downside support level (projected into future price levels).  Overall, for the NQ or the US majors to show any signs of major weakness, these Fibonacci levels would have to be tested and breached.  Until that happens, expect continued overall moderate bullish price activity.  When it happens, look out below.

The next charts we are going to review are the Metals markets (Gold and Silver).  Currently, an interesting setup is happening with Silver.  It appears to show that volatility in the Silver market will be potentially much greater than the volatility in the Gold market.  This would indicate that Silver would be the metal to watch going into and through the end of this year.  This first chart is showing the ADL modeling system and highlighting the volatility and price predictions that are present in the Silver market.  Pay attention to the facts that ranges and price projections are rather stable till about 15 days out – that’s when we are seeing a massive upside potential in Silver.
This next chart is the Fibonacci Price Modeling system on a Weekly Silver chart.  What is important here is the recent price rotation that has setup the Fibonacci Price Breach trigger to the upside (currently).  This move is telling us that as long as price stays above $16.89 on a Weekly closing price basis, then Silver should attempt to push higher and higher over time.  The projected target levels are $19.50, $20.25 and $21.45.  Notice any similarity in price levels between the Fibonacci analysis and the ADL analysis?  Yes, that $16.89 level is clearly identified as price range support by the ADL modeling system (the red price range expectation lines).


How will this playout in our opinion with Bitcoin potentially rotating lower off this double top while the metals appear to be basing and potentially reacting to fear in the market?  Allow us to explain what we believe will be the most likely pathway forward…
At first, this holiday week in the US, the markets will be quiet and not show many signs of anything.  Just another holiday week in the US with the markets mostly moderately bullish – almost on auto-pilot for the holidays.  Then closing in on the end of November, we could start to see some increased volatility and price rotation in the metals and the US majors.  If Bitcoin has moved by this time, we would expect that it would be setting up a rotational low above the -30% lows recently set.  In other words, Bitcoin would likely fall 8~15% on rotation, then stall before attempting any further downside moves.
By the end of November, we expect the US markets to have begun a price pattern formation that indicates sideways/stalling price activity moving into the end of this year.  This ADL Daily ES Chart clearly shows what is predicted going forward 20 days with price rotating near current highs for a few days before settling lower (near 2540~2550 through early Christmas 2017).  The ADL projected highs are not much higher than recent high price levels, therefore we do not expect the ES to attempt to push much higher than 2595 in the immediate future.  It might try to test this level or rotate a bit higher as a washout high, but our analysis shows that prices should be settling into complacency for the next week or two while settling near the lower range of recent price activity.


What you should take away from this analysis is the following : don’t expect any massive upside moves between now and the end of the year that last longer than a few days.  Don’t expect the markets to rocket higher unless there is some unexpected positive news from somewhere that changes the current expectations.  Expect Silver to begin to move higher in early December as well as expect Gold to follow Silver.  We believe Silver is the metal to watch as it will likely be the most volatile and drive the metals move.  Expect the major markets to be quiet through the Thanksgiving week with a potential for moderate bullish price activity before settling into a complacent retracement mode through the end of November and early December.
If Bitcoin does what we expect by creating a rotational lower price breakout setup from recent highs, we’ll know within a week or two.  If this $8000 level holds as resistance, then we will clearly see Bitcoin rotate into a defensive market pattern (a flag formation or some other harmonic pattern above support).  The US majors will likely follow this move as a broader fear could begin gripping the markets.
Lastly, as we mentioned last week, pay very close attention to the Transportation Index and it’s ability to find/hold support.  Unless the Transportation index finds some level of support and begins a new bullish trend, we could be in for a more dramatic move early next year.  Our last article clearly laid out our concerns regarding the Transportation Index and the broader market cycles.  All of our analysis should be taken as segments of a much larger market picture.  We are setting up for an interesting holiday season where the market could turn in an instant on fear or news of some global event (like a Bitcoin collapse).  The volatility we are seeing our modeling systems predict is increasing (especially in the Silver market over the next few weeks).  We could be headed for a bumpy ride with a classic top formation setting up.


Overall, protect your investments and your long positions.  Many people will be away from their PCs and away from the markets over the holidays.  It is important that you understand the risks that continue to play out in the markets.  Pay attention to market sectors that are at risk of showing us greater fear or weakness in the major markets.  Pay attention to these increases in volatility and price rotation.  Most of all, pay attention to the market’s failure to move higher over this holiday season because we should be traditionally expecting the Christmas Rally to push equities moderately higher at this time.
Should we see any more clear signs of weakness or market rotation, you will know about it with our regular updates to the public.  If you want to know how Acitve Trading Partners can assist you in staying up to day with the market cycles and analysis, then visit the Active Trading Partners and learn how we can assist you with detailed market research, daily updates, trading signals and more.
We are dedicated to helping you achieve success in the markets and do our best to make sure you are prepared for any future market moves.  See how we can assist you now and in 2018 to achieve greater success.

Stock & ETF Trading Signals

Friday, May 19, 2017

This Giant Welfare State Is Running Out of Time

By Justin Spittler

The Saudis are begging Trump to stop pumping so much oil. Saudi Arabia made the plea earlier this month in its monthly oil report. The report said “the collective efforts of all oil producers” would be needed to restore order to the global oil market. It added that this should be "not only for the benefit of the individual countries, but also for the general prosperity of the world economy."

It’s a bizarre request, to say the least. You’re probably even wondering why they would do such a thing. As I'll show you in today's essay, it's a clear act of desperation. One that tells me the country is doomed beyond repair. I’ll get to that in a minute. But first, let me tell you a few things about Saudi Arabia.

It’s the world’s second largest oil producing country after the United States.…
It’s also the largest producer in the Organization of the Petroleum Exporting Countries (OPEC), a cartel of 13 oil producing countries. Like other OPEC countries, Saudi Arabia lives and dies by oil. The commodity makes up 87% of the country’s revenues. This was a great thing when the price of oil was high. Saudi Arabia was basically printing money.

But that hasn’t been the case for years. You see, the price of oil peaked back in June 2014 at over $105 a barrel. It went on to plunge 75% before bottoming in February 2016. Today, it trades under $50.

Low oil prices are wreaking havoc on Saudi Arabia’s finances.…
But not for the reason you might think. You see, Saudi Arabia is the world’s lowest-cost oil producer. Its oil companies can turn a profit at as low as $10 per barrel. That’s one fifth of what oil trades for today.

So what’s the problem? The problem is that Saudi Arabia is one giant welfare state.

Nick Giambruno, editor of Crisis Investing, explains:
Saudi Arabia has a very simple social contract. The royal family gives Saudi citizens cradle-to-grave welfare without taxation. The Saudi government spends a fortune on these welfare programs, which effectively keep its citizens politically sedated. In exchange, the average Saudi citizen forfeits any political power he would otherwise have.
Not only that, about 70% of Saudi nationals work for the government. These “public servants” earn 1.7 times more than their counterparts in the private sector.

In short, Saudi Arabia uses oil money to keep its citizens in line.…
But this scheme isn’t cheap. According to the International Monetary Fund (IMF), Saudi Arabia needs oil to trade north of $86 a barrel to balance its budget. That’s nearly double the current oil price. This is creating big problems for the Saudi kingdom. In 2015, the Saudis posted a record $98 billion deficit. That was equal to about 15% of the country’s annual economic output. Last year, it ran another $79 billion deficit.

Saudi Arabia is now desperately trying to restore its finances.…
It’s slashed its government subsidies. It’s borrowed billions of dollars. It’s even trying to reinvent its oil addicted economy. In fact, it plans to increase non oil revenues sixfold by 2030. It’s also trying to spin off part of the national oil company, Saudi Aramco, on the stock market. And it wants to create a $1.9 trillion public fund to invest at home and abroad.

The Saudis have even tried to rig the global oil market.…
It’s why they met with non OPEC members like Russia at the December meeting. At this meeting, OPEC and non OPEC members agreed to cut production. It was the first deal like this since 2001. OPEC hoped this historic pact would lift oil prices. There’s just one big problem.

U.S. oil producers aren’t playing ball.…
Instead of cutting output, they’ve rapidly increased production. You can see this in the chart below. U.S. oil production has jumped 10% since last July.


U.S. oil production is now approaching the record level set back in 2015. There’s good reason to think production will blow past that high, too. To understand why, look at the chart below. It shows the total number of U.S. rigs actively looking for oil. You can see that the total number of rigs plummeted in November 2015 before bottoming a year ago.


The total U.S. oil rig count has now risen 28 weeks in a row. There are now 396, or 125%, more rigs looking for oil in the United States than there were a year ago.

If this continues, the price of oil will slide lower.…
Saudi Arabia isn’t used to feeling this helpless. After all, the Saudis had a firm grip on the global oil market for decades. If it wanted, it could raise the price of oil by slashing production. It also had the ability to drive the oil price lower by flooding the market with excess oil. Those days are over. The United States now rules the global oil market, and it’s showing no mercy.

Unless this changes soon, Saudi Arabia is doomed.

After all, the country is already in a race against time. According to the IMF, Saudi Arabia is on pace to burn through all of its cash within five years. In other words, we’re witnessing a seismic power shift in the global energy markets, one that could cause oil prices to plunge even lower. That would be bad news for many oil companies in the short term. But it should also lead to one of the best buying opportunities we’ve seen in years. I’ll be sure to let you know when it’s time to pull the trigger. Until then, stay on the sidelines. This one could get nasty.

P.S. Crisis Investing editor Nick Giambruno predicted that Saudi Arabia’s oil addicted economy would implode back in March 2016. Not only that, he told his readers how to profit from this crisis by recommending a world class U.S. oil company.

Nick’s readers are up more than 20% on this investment. But it should head much higher once the U.S. puts Saudi Arabia out of its misery. You can learn all about Nick’s top oil stock by signing up for Crisis Investing. Click here to begin your risk free trial.

The article This Giant Welfare State Is Running Out of Time was originally published at caseyresearch.com.




Stock & ETF Trading Signals

Wednesday, May 25, 2016

Hundreds of Oil Stocks Could Go to Zero…Will You Still Be Owning One of Them?

By Justin Spittler

The largest shale oil bankruptcy in years just happened. If you own oil stocks, you'll want to read today's essay very closely. Because there's a good chance hundreds more oil companies will go bankrupt soon. As you probably know, the oil market is a disaster. The price of oil has plunged 75% since 2014. In February, oil hit its lowest level since 2003.

Oil crashed for a simple reason: There’s too much of it. New methods like “fracking” have led to a huge spike in global oil production. Today, oil companies pump about 1 million more barrels a day than the world uses.

Last year, America’s biggest oil companies lost $67 billion..…

To offset low prices, oil companies have slashed spending by 60% over the past two years. They’ve laid off more than 120,000 workers. They’ve sold assets and abandoned projects. Some have even cut their prized dividends.

For many oil companies, deep spending cuts weren’t enough…

The number of bankruptcies in the oil industry has skyrocketed….

Bloomberg Business reported earlier this month:
Since the start of 2015, 130 North American oil and gas producers and service companies have filed for bankruptcy owing almost $44 billion, according to law firm Haynes & Boone.
And that doesn’t even include two “big name” bankruptcies in the last couple weeks. Two weeks ago, Linn Energy filed for bankruptcy, making it the largest shale oil bankruptcy since 2014. It owes lenders $8.3 billion.

A week later, SandRidge Energy declared bankruptcy. It became the second biggest shale oil company to go bankrupt. The company owes its lenders about $4.1 billion. Ultra Petroleum, Penn Virginia, Breitburn Energy, and Halcón Resources also filed for bankruptcy in the past couple weeks.

Hundreds more oil companies could go bankrupt this year..…

The Wall Street Journal reported last week:
This year, 175 oil and gas producers around the world are in danger of declaring bankruptcy, and the situation is nearly as dire for another 160 companies, many in the U.S., according to a report from Deloitte’s energy consultants.
Defaults by oil and gas companies are already skyrocketing. The Wall Street Journal continues:
Oil and gas companies this year have defaulted on $26 billion, according to Fitch Ratings data. That figure already surpasses the total for 2015, $17.5 billion.
Fitch, one of the nation’s largest credit agencies, expects 11% of U.S. energy bonds to default this year. That would be the highest default rate for the energy sector since 1999.

Many investors thought the oil crisis was over..…

That’s because the price of oil has surged 80% since February. Dispatch readers know better. For months, we’ve been warning there would be more bankruptcies and defaults. We said many oil companies need $50 oil to make money. The price of oil hasn’t topped $50 a barrel since last July. Even after its big rally, oil still trades for about half of what it did two years ago.

Oil prices will stay low as long as there’s too much oil..…

Although the world still has too much oil, the surplus has shrunk in the past few months. In February, the global economy was oversupplied by about 1.7 million barrels a day. Thanks to U.S. production cuts, the surplus is now just 1.0 million barrels a day. The number of rigs actively looking for oil in the U.S. has dropped by 80% since October. This month, the U.S. oil rig count hit its lowest level in 70 years.

However, many other countries aren’t cutting production at all. Saudi Arabia and Russia, two of the world’s biggest oil-producing countries, are both pumping near-record amounts of oil. Frankly, these countries don’t have much choice. Oil sales account for 77% of Saudi Arabia’s economy. And oil accounts for 50% of Russia’s exports. If these countries stop pumping oil, their economies could collapse.

Low prices have made it impossible for some oil companies to pay their debts..…

U.S. oil companies borrowed nearly $200 billion between 2010 and 2014. If you’ve been reading the Dispatch, you know the Federal Reserve is mostly to blame for this. It’s held its key interest rate near zero since 2008. This made it incredibly cheap to borrow money. When oil prices were high, the debt wasn’t an issue. Companies made enough money to pay the bills. That’s no longer the case. Today, many oil companies are burning through cash to pay their debts.

To make matters worse, many weak oil companies have been cut off from the credit market..…

Before prices collapsed, oil companies could refinance their debt if they ran into trouble. This could buy them time to sort out their problems. These days, many banks will no longer lend oil companies money. Bloomberg Business reported last month:
Almost two years into the worst oil bust in a generation, lenders including JPMorgan Chase & Co., Wells Fargo & Co. and Bank of America Corp. are slashing credit lines for struggling energy companies…
Since the start of 2016 lenders have yanked $5.6 billion of credit from 36 oil and gas producers, a reduction of 12 percent, making this the most severe retreat since crude began tumbling in mid-2014.
Oil stocks are still very risky..…

But that doesn’t mean you should avoid them entirely. As we’ve said before, oil stocks have likely entered a new phase. You see, when oil prices first tanked, investors sold oil stocks indiscriminately. Both strong and weak stocks plunged. In other words, investors “threw the baby out with the bath water.” You often see this behavior during a crisis.

Exxon Mobil (XOM), the world’s biggest oil company, fell 34% since 2014. Chevron (CVX), the world’s second biggest, dropped 48%. Now that oil has stabilized, the stronger companies are separating themselves from the weaker companies. This year, Exxon is up 15%. Chevron is up 11%. The crash in oil prices has given us a chance to buy world class oil companies at deep bargains.

If you want to own oil stocks, stick with the best companies..…

If you're going to invest in the sector, there are four key things to look for: 

Make sure you buy companies that can 1) make money at low oil prices. You should also look for companies with 2) healthy margins 3) plenty of cash and 4) little debt.

In March, Crisis Investing editor Nick Giambruno recommended a company that hits all of these checkmarks. It has a rock-solid balance sheet…some of the industry’s best profit margins…and “trophy assets” in America’s richest oil regions. It can even make money with oil as cheap as $35.

The stock is up 9% in two months. But Nick thinks it could just be getting started. After all, it’s still 30% below its 2014 high. You can get in on Nick’s oil pick by signing up for Crisis Investing. If interested, we encourage you to watch this short presentation. It explains how you can access Nick’s top investing ideas for $1,000 off our regular price.

This incredible deal ends soon. Click here to take advantage while you can.

You’ll also learn about an even bigger “crisis investing” opportunity on Nick’s radar. This coming crisis could radically change the financial future of every American. By watching this video, you’ll learn how to profit from it. Click here to watch.

Chart of the Day

Oil and gas companies are losing billions of dollars, we’re in earnings season right now. This is when companies tell investors if their earnings grew or shrunk last quarter. A good earnings season can send stocks higher. A bad one can drag stocks down.

As of Friday, 95% of the companies in the S&P 500 had shared first quarter results. Based on these results, the S&P 500 is on track to post a 6.8% decline in earnings. That would be the biggest drop in quarterly earnings since the 2009 financial crisis.

Oil and gas companies are a big reason U.S. stocks are having such a horrible earnings season.

As you can see below, first-quarter earnings for energy companies in the S&P 500 have plunged 107% since last year. Keep in mind, this group includes Exxon, Chevron, and other blue chip energy stocks.

Again, if you’re looking to buy oil stocks, make sure you “look under the company’s hood” before you buy it. Steer clear of companies that are losing money and have a lot of debt.




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Wednesday, April 20, 2016

Here’s The Only Oil Stock You Should Own Right Now

By Justin Spittler

It was the most important oil meeting in years. The world was watching closely on Sunday as 16 major oil nations met in Doha, Qatar. Saudi Arabia and Russia, two of the world’s biggest oil producers, were among the heavyweights in attendance. The purpose of the meeting: to reach an agreement to “freeze” oil production at current levels. It was the first time in fifteen years that OPEC, a cartel of 13 oil producing countries, met with nonmembers to discuss freezing output.

As you likely know, the price of oil has crashed 75% since June 2014. Thanks to new methods like “fracking,” the world has too much oil. According to the International Energy Association, oil companies produce about 1.4 million more barrels of oil a day than the global economy consumes. 

In February, oil hits its lowest price since 2003. Low oil prices have slammed economies that depend on oil. For example, Saudi Arabia posted its largest budget deficit in history last year. And Russia’s currency has lost 49% of its value since oil prices began to decline.

Low oil prices have slammed major oil companies, too. Last year, British oil giant BP (BP) recorded its biggest annual loss ever. U.S. oil giants Exxon Mobil (XOM) and Chevron (CVX) earned their lowest annual profits since 2002 last year. Since June 2014, shares of these three oil companies are down 27% on average.

Many experts hoped an agreement to freeze production would support oil prices…
But the countries failed to reach an agreement. Bloomberg Business explained why.
Discussions broke down after Saudi Arabia and other Gulf countries rejected any deal unless all OPEC members joined including Iran…
Iran didn’t even attend the meeting in Doha…
For years, economic sanctions have cut off Iran from the global economy. These sanctions were put in place to prevent Iran from building a nuclear bomb. They crippled Iran's economy in the process. Iran’s oil exports have plunged 45% since 2011.

The U.S. and five other countries lifted these sanctions last year. With the sanctions gone, Iran plans to significantly boost its oil production. In March, Iran pumped 3.3 million barrels per day (bpd), which made it the world’s sixth-biggest oil producer. It hopes to soon increase that to 4 million bpd.
Iran also plans to double its oil exports. In February, Iran sold oil to Europe for the first time since 2012. Bloomberg Business explains:
Iran’s oil minister called a proposal by Saudi Arabia and Russia to freeze oil production “ridiculous” as it seeks to boost output after years of sanctions constrained sales.
Yesterday, the price of oil plunged 6.4% on the bad news…
But it recovered almost all its losses, ending the day down just 0.7%. Today, it’s up 3.2% Oil stocks shrugged off the bad news, too. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP), which tracks major U.S. oil producers, rose 2% yesterday. We see this as an important bullish sign for oil stocks. This bad news could have easily pushed oil below $30 a barrel. Instead, oil is trading higher today than it was yesterday.

It looks like the worst is over for oil stocks…
Although we’re not “calling the bottom” in oil stocks, we do think the oil market has entered a new phase.
You see, when an industry crashes as hard as oil has over the past 18 months, all stocks in the industry usually tank. Even the best companies suffer big losses. But when a crashing market nears a bottom, things start to change. Investors looking for bargains begin to buy top quality companies. Strong companies start to separate themselves from the weak. That’s happening in the oil sector now.

For example, Exxon, the world’s largest publicly traded oil company, has jumped 14% this year. Chevron, the second largest, has jumped 11%. These are both large, quality oil companies. Meanwhile, weaker companies are still fighting to survive. They’re bleeding cash. To make money, they need oil at $50 or higher. Yesterday, oil closed at $41.47…and that’s after a 50% rally since February. We’re not saying oil prices are ready to head higher. As we mentioned, the world is still oversupplied by about 1.4 million barrels per day. We’ll likely see more defaults and bankruptcies in the oil sector.

But we are saying now is a good time to start buying cheap, extremely high quality oil stocks…
Because oil is likely to stay low for at least several more months, it’s important to buy only the very best oil businesses. Stick with companies that have big margins, plenty of cash, and little debt. Only invest in companies that can make money even if oil stays low.

Nick Giambruno, editor of Crisis Investing, just recommended one such oil company. If you don’t know Nick, his specialty is buying quality assets for cheap, when no one else wants them. Following this strategy has allowed him to make large gains for subscribers, like the 210% gain he made on Cypriot hospitality business Lordos Hotels in the wake of that country’s banking crisis a few years back. Nick has been keeping a close eye on the oil industry for months…waiting for the right time to buy. And last month, he told his readers it was finally time to “pull the trigger.”

He recommended a world class oil company with “trophy assets” in America’s richest oil regions...a rock solid balance sheet…and some of the industry’s best profit margins. Most importantly, the company is making money. According to Nick, some of the company’s projects are profitable at as low as $35 oil.
Nick is certain this company will survive the current downturn. Its stock could deliver huge gains when oil prices recover past $50.

You can learn more about this opportunity by signing up for Crisis Investing. Click here to begin your risk-free trial.

Chart of the Day

Silver is having its best day in six months. If you’ve been reading the Dispatch, you know silver recently “broke out.” More specifically, it “carved a bottom.” That happens when an asset stops falling, forms a bottom for a period of time, and starts heading higher. Assets often keep rising after carving bottoms. As you can see below, that’s exactly what silver’s done. Today, silver skyrocketed 5.3%, its biggest jump since October. Silver is now up 23% on the year. It’s at its highest price since last April.

At risk of sounding like a broken record, we think silver is headed much higher. It could easily triple in the coming years. Silver stocks, which are leveraged to the price of silver, could go even higher. If you would like to speculate on higher silver prices, we recommend you watch a short video we just put together. It explains how you could grow your money by 10x or more in the coming years. If interested, you’ll want to watch this presentation soon. It will no longer be available after tomorrow.

Click here to watch.



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Monday, March 21, 2016

Crude Oil Retesting $30 Dollars or Lower?

Recently, Light Crude has seen a dramatic 35%+ increase in value.  As the current price continue to flirt with $40 per barrel, the likelihood of a further price rise is on everyone’s mind.  With recent lows near $26 per barrel, what is the possibility that oil will form a base above $30 and attempt a rally?
Historically, the 2009 low price for oil was $33.20.  This level should be viewed as a key level of support for current price action.  The recent price rotation below this level is a sign that oil prices are under extreme pressure in the current economic environment with a supply glut and slower than expected demand.
It is my opinion that the price of oil will continue to reflect the supply/demand aspects of the global markets in relation to global economic activity.  Thus, my analysis is that Oil will likely attempt to retest support, near $30 or below, in the immediate future in direct relation to continued supply production in conjunction with slower global demand.
(Baltic Dry Index Chart – LongTerm)

The BDI Index continues to attempt to push to new lows.  This is a strong indication that global exports and international demand from consumers and business is continuing to diminish.

oila

Crude Oil Analysis & Trade Signals: www.The Gold & Oil Guy.com
(DOWT – Transportation Chart)

Even though the DOW Transportation Index has risen recently, the current direction is decisively bearish in indicates the next level of support is near 6265 – clearly 1400 points below current levels.

oilb

(Baltic Dry Index Recent)

The longer the BDI continues to push to new lows, the more likely we are to see continued contraction in demand for commodities and global exports.  Thus, with the continued supply production throughout the globe and continued global contraction, one could expect that Oil prices will continue to be under pressure globally.

oilc
The simple mechanics of the equation are that certain ME and foreign countries require continued income from oil production/sales.  As the continued decline in Oil prices creates economic pressure, these countries have little alternative but to continue producing and selling as any price to feed their need for dollars.  This creates a mechanism that propels a vicious cycle or over production and sales in an attempt to generate dollars that are desperately needs to fund a relatively mature economy.
As all things are in a constant state of flux, it become important to understand that price rotation in the Oil market will likely continue between $28 and $42 for a period of time.  This is really a traders market in the sense that a nearly rotation level this large, in percentage relation, is available for all traders.  Be cautious of rallies as they may be short-lived. I expect a number of weeks of rotation near $36 ppb followed by a lower price rotation back to near $25 ppb between April 5th and May 5th.
After that price rotation lower, then I expect one of two targets to be tested, $21 ppb or $37 ppb.  It all depends on how the global markets are performing in a month or two.
(CL Chart)

oild
(XOI Chart)

oile
Right now, expect continued price rotation between $42 ppb and $28 ppb till shortly after April 5th.  Then expect much larger price rotation till after May 5th.  At that point, we’ll have to see how the global economic factors are playing out to make further price expectations.
I expect there to be some big trades around crude oil for both short term swing trades and long term trend trades but the market just is not yet here.

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Wednesday, March 11, 2015

Crude Oil, Divorce, and Bear Markets

By Tony Sagami


Everybody loves a parade. I sure did when I was a child, but I’m paying attention to a very different type of parade today. The parade that I’m talking about is the long, long parade of businesses in the oil industry that are cutting jobs, laying off staff, and digging deep into economic survival mode. The list of companies chopping staff is long, but two more major players in the oil industry joined the parade last week.

Pink Slip #1: Houston-based Dresser-Rand isn’t a household name, but it is a very important part of the energy food chain. Dresser-Rand makes diesel engines and gas turbines that are used to drill for oil.
Dresser-Rand announced that it's laying off 8% of its 8,100 global workers. Many Wall Street experts were quick to point the blame at German industrial giant Siemens, which is in the process of buying Dresser-Rand for $7.6 billion.

Fat chance! Dresser-Rand was crystal clear that the cutbacks are in response to oil market conditions and not because of the merger with Siemens. The reason Dresser-Rand cited for the workforce reduction was not only lower oil prices but also the strength of the US dollar.

If you’re a regular reader of this column, you know that I believe the strengthening US dollar is the most important economic (and profit-killing) trend of 2015.

Pink Slip #2: Oil exploration company Apache Corporation reported its Q4 results last week, and they were awful. Apache lost a whopping $4.8 billion in the last 90 days of 2014.

No matter how you cut it, losing $4.8 billion in just three months is a monumental feat.

Of course, the “dramatic and almost unprecedented” drop in oil prices was responsible for the gigantic loss, but what really matters is the outlook going forward.


CEO John Christmann, to his credit, is taking tough steps to stem the financial bleeding, and that means:
  • Shutting down 70% of the company's drilling rigs.
  • Slashing it's 2015 capital budget to between $3.6 and $5.0 billion, down from $8.5 billion in 2014.
Those aren’t the actions of an industry insider who expects things to get better anytime soon.

I don’t mean to bag on Dresser-Rand and Apache, because they’re far from alone. Schlumberger, Baker Hughes, Halliburton, Weatherford International, and ConocoPhillips have also announced major layoffs. And don’t make the mistake of thinking that the only people getting laid off are blue-collar roughnecks. These layoffs affect everyone from secretaries to roughnecks to IT professionals.

In fact, according to staffing expert Swift Worldwide Resources, the number of energy jobs lost this year has climbed to well above 100,000 around the world.

From Global to Local


Sometimes it helps to put a local, personal perspective to the big-picture national news.

In my home state of northwest Montana, a huge number of men moved to North Dakota to work in the Bakken gas fields. Montana is a big state; it takes about 14 hours to drive from my corner of northwest Montana to the North Dakota oil fields, so that means those gas workers don’t make it back to their western Montana homes for months.

Moreover, the work was six, sometimes seven days a week and 12 hours a day, so once there, they couldn’t drive back home even if they wanted to. This meant long absences… and a good friend of mine who is a marriage counselor told me that the local divorce rate was spiking because of them.

Now the northwest Montana workers are returning home because the once-lucrative oil/gas jobs are disappearing. That news won’t make the New York Times, but it’s as real as it gets on Main Street USA.

From Local to National


Of course, the oil industry's woes aren’t a carefully guarded Wall Street secret. However, I do think that Wall Street—and perhaps even you—are underestimating the impact that low oil prices are going to have on economic growth and GDP numbers going forward.

Let me explain.

Industrial production for the month of January, which measures the output of US manufacturers, miners, and utilities, came in at a “seasonally adjusted" 0.2%.


A 0.2% gain isn’t much to shout about, but the real key was the impact the mining component (which includes oil/gas producers) had on the industrial-production calculation.

The mining industry is the second-largest component of industrial production, and its output fell by 1.0% in January. It was the biggest drag on the overall index.

However, the Federal Reserve Bank said, “The decline [was] more than accounted for by a substantial drop in the index for oil and gas well drilling and related support activities.”

How much did it account for? The oil and gas component fell by 10.0% in January.

Yup, a double-digit drop in output in just one month. Moreover, it was the fourth monthly decline in a row.
Last week’s weak GDP caught Wall Street off guard, but there are a lot more GDP disappointments to come as the energy industry layoffs percolate through the economy. Here’s how my Rational Bear readers are getting ready for GDP and corporate-earnings disappointments that are sure to rattle the markets.
Can your portfolio, as currently composed, handle a slowing economy and falling corporate profits? For most investors, the answer is “no.” Click above to find out how to protect yourself.

Tony Sagami

Tony Sagami

30 year market expert Tony Sagami leads the Yield Shark and Rational Bear advisories at Mauldin Economics. To learn more about Yield Shark and how it helps you maximize dividend income, click here.

To learn more about Rational Bear and how you can use it to benefit from falling stocks and sectors, click here.




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