Why the U.S. Dollar is Critical for the S&P 500 Index this Week

Recently I have been advising members of my service to be cautious as the market appears to be at a major crossroads. The U.S. Dollar Index is on the verge of a major breakdown. If a breakdown occurs it will be clear that the Federal Reserve will have officially stopped any potential rise in the U.S. Dollar. 

If the U.S. Dollar pushes down below the recent lows and we get continuation to the downside, we will break the recent bullish pattern. Furthermore, if the Dollar starts to weaken it should benefit equities and other risk assets such as oil. Higher energy prices would not be long term bullish for equity markets so there is concern if the Dollar really starts to extend lower.

Over the past few months the Dollar has been producing a series of higher highs and higher lows, however the current cycle may break the pattern.....as can be seen here.

"Why the U.S. Dollar is Critical for the S&P 500 Index this Week"

Top 5 Producing States Combined Marketed Natural Gas Output Rose in 2011

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Combined marketed natural gas production from the top five natural gas producing states...Texas, Louisiana, Wyoming, Oklahoma, and Colorado increased by about 7.5% in 2011, although their share of total U.S. natural gas output fell slightly to about 65%.

Marketed natural gas production from these states in 2011 totaled 15.7 trillion cubic feet (Tcf), according to annual data from the U.S. Energy Information Administration. The drop in their combined share of total U.S. production reflects increased contributions from other states, particularly those in which operators significantly expanded development of shale gas formations. Shale gas production from states such as Pennsylvania helped boost overall U.S. natural gas output by almost 8% in 2011.

Source: U.S. Energy Information Administration, Marketed Natural Gas Production, and Colorado Oil and Gas Conservation 

Due primarily to drilling programs in the Marcellus shale formation, Pennsylvania's marketed natural gas production in 2011 more than doubled to nearly 1.3 Tcf, according to preliminary estimates from Pennsylvania's Department of Environmental Protection. Arkansas has also seen strong growth in its marketed natural gas production, with output more than tripling since 2007 due mainly to increased production in the Fayetteville shale play.

Alaska is the country's second leading natural gas producer in terms of gross withdrawals, but most of the state's production is not brought to market, as production volumes far exceed local demand and there is insufficient pipeline capacity to transport the gas to distant markets. Most of Alaska's natural gas not brought to market is re-injected into existing oil fields to provide sufficient pressure to maintain oil production rates.

Highlights from the top marketed natural gas producing states in 2011.....

Texas: Natural gas production increased 4.5% from the year before to the highest level since 1980, due in part to growing output from the Eagle Ford shale formation where drillers who are aggressively pursuing high-value liquid hydrocarbons are also producing growing amounts of natural gas.

Louisiana: Natural gas production increased 38% as the Haynesville shale gas formation in the northwest part of the state was one of the biggest shale gas producing plays in the United States.

Wyoming: Natural gas production fell 5.6% to the lowest level since 2007, as lower natural gas prices made coalbed methane gas that accounts for almost two-thirds of the state's natural gas production less profitable because high-priced gas liquids aren't normally found in coal seams.

Oklahoma: Natural gas production increased 3.9% to the second highest annual output since 1994 due to higher output in the Woodford shale play.

Colorado: Natural gas production grew about 1.4% as output increased for the 25th year in a row to break another record output high. The Niobrara shale play in the northeast corner of the state helped raise Colorado's natural gas production.

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Occidental Petroleum Announces First Quarter of 2012 Income

* Q1 2012 net income of $1.6 billion ($1.92 per diluted share)

* Q1 2012 total daily oil and gas production of 755,000 barrels of oil equivalent, the highest in Occidental’s history

* Q1 2012 domestic daily oil and gas production of 455,000 barrels of oil equivalent, record for the 6th consecutive quarter.

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Occidental Petroleum Corp. (NYSE:OXY) announced net income of $1.6 billion ($1.92 per diluted share) for the first quarter of 2012, compared with the first quarter of 2011 net income of $1.5 billion ($1.90 per diluted share).

In announcing the results, Stephen I. Chazen, President and Chief Executive Officer, said, “For the quarter, we generated strong results with diluted EPS of $1.92 per share, cash flow from operations of $2.8 billion and annualized ROE of 16 percent. We increased our annual dividend rate by $0.32 per share, or 17 percent, to $2.16 per share.

“Our first quarter total company production of 755,000 barrels of oil equivalent per day was the highest in Occidental’s history and our domestic production of 455,000 barrels of oil equivalent per day was a record for the sixth consecutive quarter. We are the largest liquids producer in the lower 48 states and we increased our domestic liquids production by 6,000 barrels per day from the fourth quarter of 2011 and 35,000 barrels a day, or 12 percent, from the first quarter of 2011.”

Read the entire earnings report at oxy.com

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Chevron Reports Strong Earnings, Increases Dividend

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Chevron Corporation (NYSE: CVX) today reported earnings of $6.5 billion ($3.27 per share – diluted) for the first quarter 2012, compared with $6.2 billion ($3.09 per share – diluted) in the 2011 first quarter.

• Portfolio produces strong earnings and cash flows
• Key development projects on track to deliver longer-term volume growth
• Dividend increase raises yield to 3.4 percent

Sales and other operating revenues in the first quarter 2012 were $59 billion, compared to $58 billion in the year ago period.

Earnings Summary

                                                   Three Months

                                                   Ended March 31

Millions of dollars                                                                2012                 2011
Earnings by Business Segment
Upstream                                                                          $6,171              $5,977
Downstream                                                                         804                   622
All Other                                                                             (504)                 (388)

Total (1)(2)                                                                        $6,471              $6,211
(1) Includes foreign currency effects                                                            $(228)                     $(164)
(2) Net income attributable to Chevron Corporation (See the entire report)

“In the first quarter, we continued to post strong earnings and healthy cash flows,” said Chairman and CEO John Watson. “This has enabled us to both reward our shareholders with a substantial dividend increase, our third in just over a year, and to reinvest in profitable growth projects to help meet rising global energy demand. Our key development projects remain on track to deliver compelling volume growth over the next five years.” Watson continued, “New production is coming on as planned, and we continue to see strong customer interest in our Australia LNG projects that underpin our future growth.”

Read the entire report at Chevron.Com

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Gold Bears Still Have the Advantage Despite a Bullish Spike on Thursday

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June crude oil closed up $0.46 a barrel at $104.57 today. Prices closed nearer the session high again today. Bulls and bears are on a level near term technical playing field, but the bulls are having a good week.

June natural gas closed down 4.0 cents at $2.13 today. Prices closed near the session low but did hit a fresh three week high early on today. The bears still have the overall near term technical advantage. There are still no early clues to suggest a market low is close at hand.

June gold futures closed up $18.00 an ounce at $1,660.40 today. Prices closed nearer the session high today and hit a fresh two week high. Short covering and bargain hunting were featured today. The key “outside markets” were in a mildly bullish posture for gold today as the U.S. dollar index was weaker and crude oil prices were firmer.

Gold bears have the slight overall near term technical advantage. Prices still are in a two month old downtrend on the daily bar chart.

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PetroChina Blows Out Earnings Estimates

PetroChina Company Limited (NYSE:PTR) achieved stable and smooth production and operations in the first quarter of 2012 as it enhanced its management to cope with the complex and changing domestic and overseas environment. PetroChina successfully fulfilled its key operational indexes, made steady progress in the construction of key projects, engaged in the stable expansion of its overseas business, and continued to improve its safety and environmental protection. Through these efforts, PetroChina’s operational performance progressed steadily, thereby, getting off to a good start for the year.

In the first quarter of 2012, according to both the International Financial Reporting Standards and the Chinese Accounting Standards, net profit attributable to the owners of the Company was RMB39.153 billion, representing an increase of 5.8% as compared with the same period last year, and the basic earnings per share was RMB0.21.

In respect of its exploration and production operations, the Company gave top priority to exploration and continued to implement the “Peak Growth in Oil and Gas Reserves” Program. By drawing on the favorable opportunity posed by the increase in global oil prices, the Company actively organized production and operations. Crude oil production increased steadily, while natural gas production grew rapidly. In the first quarter of 2012, the Company produced 227.0 million barrels of crude oil, representing an increase of 3.6% as compared with the same period last year, and 710.9 billion cubic feet of marketable natural gas, representing an increase of 11.2% as compared with the same period last year.

Read the entire report at PetroChina.Com

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ExxonMobil Disappoints, Misses on Earnings

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“First quarter results reflect our ongoing focus on developing and delivering energy needed to support job creation and economic growth. Despite continuing economic uncertainty, we are progressing our robust investment plans to meet the energy demands of the future.

“Capital and exploration expenditures were $8.8 billion as we continue with plans to invest about $37 billion per year over the next five years. “We continued to generate strong cash flow from operations and asset sales with $21.8 billion in the quarter.

“First quarter earnings of $9.5 billion were down 11% from the first quarter of 2011.
“Oil equivalent production was down over 5% from 2011. Excluding the impact of higher prices on entitlement volumes, OPEC quota effects and divestments, production was down 1%.
“The Corporation distributed more than $7 billion to shareholders in the first quarter through dividends and share purchases to reduce shares outstanding.”

FIRST QUARTER HIGHLIGHTS

Earnings of $9,450 million, which included gains from asset sales of about $400 million, decreased 11% or $1,200 million from the first quarter of 2011. Earnings per share (assuming dilution) were $2.00, a decrease of 7%. Capital and exploration expenditures were $8.8 billion, up 13% from the first quarter of 2011. Oil equivalent production decreased over 5% from the first quarter of 2011.

Excluding the impact of higher prices on entitlement volumes, OPEC quota effects and divestments, production was down 1%. Cash flow from operations and asset sales was $21.8 billion, including proceeds associated with asset sales of $2.5 billion. Share purchases to reduce shares outstanding were $5 billion. Dividends per share of $0.47 increased 7% compared to the first quarter of 2011.

ExxonMobil and Rosneft announced the signing of agreements to progress a long term Strategic Cooperation Agreement to jointly explore for and develop oil and natural gas in Russia, and to share technology and expertise. Additionally, Rosneft will take equity in exploration and development projects in the United States and Canada.

In Romania, ExxonMobil’s affiliate drilled a successful deepwater new play test on the Neptun block in the Black Sea with the Deepwater Champion drillship and has additional 3D seismic data acquisition planned to support future drilling opportunities on the block.

ExxonMobil participated in a successful exploration well offshore Tanzania which discovered approximately 5 trillion cubic feet of recoverable gas in a high quality reservoir. A second exploration well is planned to test another prospect on the block.

Get more details on year to year earnings at ExxonMobil.com

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Crude Oil Trades Near Highs of the Week as Fed Says it's Ready to Protect Growth

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Crude oil traded near the highest level in more than a week after Federal Reserve Chairman Ben S. Bernanke said that while further stimulus is unlikely, central banks “remain prepared to do more” to protect the economy.

Futures were little changed, paring an earlier gain after more Americans than forecast filed applications for unemployment benefits last week. Economic growth is expected to “remain moderate over coming quarters and then to pick up gradually,” the Federal Open Market Committee said in a statement. U.S. crude supplies gained more than estimated last week, and Iran’s envoy in Moscow said his country may halt the expansion of its atomic program to avert new Western sanctions.

“Bernanke will do something if things don’t get better,” said Hakan Kocayusufpasaoglu, chief investment officer at Archbridge Capital in Zug, Switzerland. “And when Bernanke says he’ll do whatever it takes to get the economic growth rate improving, that means the economic trajectory rises and oil demand increases over time. And his methods for doing something increase money supply, causing the dollar to depreciate and that lifts all commodities”

Read the entire Bloomberg article

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Ecopetrol Announces First Quarter 2012 Earnings Date, New Oil Discoveries

Ecopetrol of Columbia, which can be traded on the NYSE with ticker EC, will release on Monday, April 30th, 2012 after the markets close its results for the first quarter 2012.On Wednesday, May 2nd, Ecopetrol´s senior management will host two webcasts to review the results: Spanish Bogota 1:30 p.m.,New York / Toronto 2:30 p.m.and English Bogota 3:00 p.m.,4:00 p.m. New York / Toronto. We invite you to register for the webcast in English or in Spanish.


Ecopetrol announces the discovery of hydrocarbons in the Tisquirama Este-1 exploratory well, located in the municipality of San Martin, Cesar. In initial tests, the well produced 624 barrels of oil per day, with a water cut of less than 1% and API gravity of 23 degrees.


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