Crude oil closed lower on Friday as weak earnings spur ideas of weakening energy demand. The low range close sets the stage for a steady to lower opening when Monday's night session begins. Stochastics and the RSI are turning neutral to bearish signaling that sideways to lower prices are possible near term. If November renews the decline off September's high, the 62% retracement level of the June-September rally crossing at 87.19 is the next downside target. Multiple closes above last Wednesday's high crossing at 93.66 are needed to renew this month's rally. First resistance is last Wednesday's high crossing at 93.66. Second resistance is September's high crossing at 100.73. First support is the 62% retracement level of the June-September rally crossing at 87.19. Second support is the 75% retracement level of the June-September rally crossing at 84.29.
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Natural gas closed higher on Friday. The mid-range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are diverging but turning neutral to bullish signaling that sideways to higher prices are possible near term. If November renews the rally off August's low, the 50% retracement level of the 2011-2012 decline crossing at 3.965 is the next upside target. Closes below the 20 day moving average crossing at 3.415 would confirm that a short term top has been posted. First resistance is today's high crossing at 3.647. Second resistance is the 50% retracement level of the 2011-2012 decline crossing at 3.965. First support is the 20 day moving average crossing at 3.415. Second support is the reaction low crossing at 3.327.
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Gold closed lower on Friday as it renewed this month's decline. The low range close sets the stage for a steady to lower opening when Friday's night session begins trading. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near term. If December extends this month's decline, the 38% retracement level of the May-October rally crossing at 1698.00 is the next downside target. Closes above the 20 day moving average crossing at 1764.70 are needed to confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 1764.70. Second resistance is this month's high crossing at 1798.10. First support is today's low crossing at 1716.00. Second support is the 38% retracement level of the May-October rally crossing at 1698.00.
Check out Gold Is Not Back In Favor Yet.....
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Friday, October 19, 2012
Thursday, October 18, 2012
Gold Is Not Back In Favor Yet.....
Despite the decline this past week, gold seems to be regaining favor with global investors, as just a week earlier it had been flirting with the $1,800 an ounce mark. Quite a change from the sentiment in early summer when some investors were questioning whether the yellow metal’s decade long bull run was coming to a close.
The rebound in investor sentiment toward gold, of course, coincided with the launching of open ended QE3 (or QE infinity) by the Federal Reserve. Since then gold has “barely paused for breath. It has, as discussed previously, touched all time highs in terms of euros or Swiss francs.
QE3 certainly seemed to worry some investors. These people moving into gold are concerned about things such as competitive devaluations and the debasement of currencies in an attempt to pay back enormous debt loads with a cheaper currency. This road – currency debasement – eventually leads to inflation most believe.
So it is really is not surprising that, according to UBS, investors in exchange traded funds raised their holdings by 158 tons since the beginning of August to a record 2,681 tons of bullion recently.
Many of the world’s best investors are in agreement with the average person putting his or her money into gold. The list of names is impressive: George Soros, John Paulson, Ray Dalio and Bill Gross.
Ray Dalio, founder and chief investment officer of Bridgewater Associates, the world’s largest macro hedge fund, told CNBC viewers recently: “Gold should be part of everybody’s portfolio. We have a situation now when you have too much debt. Too much debt leads to the printing of money to make it easier to service. All of those things mean that some portion [of a portfolio] should be in gold.”
Dalio’s conclusion? “Only gold and real assets would survive.”
All of this positive macro news about gold has managed to influence the gold chart too. According to asset manager Blackrock, “the gold chart has turned decidedly bullish.” Blackrock was speaking about the so called “golden cross”. That occurs when the 50 day moving average moves above the 200 day moving average.
Blackrock noted that the last time gold’s chart looked so good was shortly after the Federal Reserve announced QE1, the first round of money printing. It said that if gold does the same thing it did back then, the price of the precious metal will hit $2,400 an ounce by next summer. Of course, macro factors like Chinese and Indian demand for physical gold will play a major role in whether we reach those lofty levels.
While I am bullish on gold longer term the chart patterns, volume and sentiment for both gold and silver are overwhelmingly bearish looking for the next couple weeks. A sharp pullback is likely to unfold before they take another run at resistance and breakout to new highs.
Chris Vermeulen
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The rebound in investor sentiment toward gold, of course, coincided with the launching of open ended QE3 (or QE infinity) by the Federal Reserve. Since then gold has “barely paused for breath. It has, as discussed previously, touched all time highs in terms of euros or Swiss francs.
QE3 certainly seemed to worry some investors. These people moving into gold are concerned about things such as competitive devaluations and the debasement of currencies in an attempt to pay back enormous debt loads with a cheaper currency. This road – currency debasement – eventually leads to inflation most believe.
So it is really is not surprising that, according to UBS, investors in exchange traded funds raised their holdings by 158 tons since the beginning of August to a record 2,681 tons of bullion recently.
Many of the world’s best investors are in agreement with the average person putting his or her money into gold. The list of names is impressive: George Soros, John Paulson, Ray Dalio and Bill Gross.
Ray Dalio, founder and chief investment officer of Bridgewater Associates, the world’s largest macro hedge fund, told CNBC viewers recently: “Gold should be part of everybody’s portfolio. We have a situation now when you have too much debt. Too much debt leads to the printing of money to make it easier to service. All of those things mean that some portion [of a portfolio] should be in gold.”
Dalio’s conclusion? “Only gold and real assets would survive.”
All of this positive macro news about gold has managed to influence the gold chart too. According to asset manager Blackrock, “the gold chart has turned decidedly bullish.” Blackrock was speaking about the so called “golden cross”. That occurs when the 50 day moving average moves above the 200 day moving average.
Blackrock noted that the last time gold’s chart looked so good was shortly after the Federal Reserve announced QE1, the first round of money printing. It said that if gold does the same thing it did back then, the price of the precious metal will hit $2,400 an ounce by next summer. Of course, macro factors like Chinese and Indian demand for physical gold will play a major role in whether we reach those lofty levels.
While I am bullish on gold longer term the chart patterns, volume and sentiment for both gold and silver are overwhelmingly bearish looking for the next couple weeks. A sharp pullback is likely to unfold before they take another run at resistance and breakout to new highs.
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Chris Vermeulen
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Wednesday, October 17, 2012
Kinder Morgan Beats on Earnings, Increases Dividend
Chairman and CEO Richard D. Kinder said, “KMP had a strong third quarter with all five of our business segments reporting better results than in the third quarter of 2011. In total, KMP produced $1.14 billion in segment earnings before DD&A and certain items, a 21 percent increase over $0.94 billion for the same period a year ago. Third quarter highlights included contributions from the dropdowns of 100 percent of Tennessee Gas Pipeline (TGP) and 50 percent of El Paso Natural Gas (EPNG), record export coal volumes in our Terminals business, strong oil production at SACROC in our CO2 segment and increased natural gas demand for electric power generation on the TGP system. Looking ahead, we see significant growth opportunities across all of our business segments, and we remain very excited about the additional prospects that we expect KMP to realize from Kinder Morgan, Inc.’s acquisition of El Paso Corporation, which closed in the second quarter. With our large footprint of assets in North America, KMP is well positioned for future growth.”
KMP reported third quarter distributable cash flow before certain items of $455 million, up 15 percent from $394 million for the comparable period in 2011. Distributable cash flow per unit before certain items was $1.28 compared to $1.19 for the third quarter last year. Third quarter net income before certain items was $574 million compared to $451 million for the same period in 2011. Including certain items, net income was $383 million compared to $216 million for the third quarter last year. Certain items for the third quarter totaled a net loss of $191 million versus a net loss of $235 million for the same period last year.
For the first nine months of the year, distributable cash flow before certain items was $1.29 billion, up 17 percent from $1.10 billion for the comparable period in 2011. Distributable cash flow per unit before certain items was $3.72 compared to $3.40 for the same period last year. Net income before certain items was $1.58 billion compared to $1.27 billion for the first three quarters of 2011. Including certain items, net income was $737 million versus $789 million for the same period last year.
Certain items for the first nine months of the year totaled a net loss of $838 million versus a net loss of $479 million for the comparable period in 2011. The loss, due to certain items for the first three quarters, was primarily attributable to the re-measurement of discontinued operations to fair value related to the KMP assets to be divested in order to obtain Federal Trade Commission approval for Kinder Morgan, Inc.’s acquisition of El Paso.
Read the entire KMP report
Kinder Morgan, Inc. (NYSE: KMI) today reported third quarter cash available to pay dividends of $362 million, up 93 percent from $188 million for the comparable 2011 period. Through the first nine months, KMI reported cash available to pay dividends of $972 million compared to $623 million for the same period in 2011. The company now expects to generate cash available to pay dividends of more than $1.325 billion for the year, significantly ahead of its published annual budget. The increase is attributable to the El Paso Corporation acquisition which closed in late May.
Check out the entire KMI report
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Halliburton Announces 3rd Quarter Earnings
Reported income from continuing operations for the third quarter of 2012 was $608 million, or $0.65 per diluted share. This compares to income from continuing operations for the second quarter of 2012 of $745 million, or $0.80 per diluted share.
Halliburton’s consolidated revenue in the third quarter of 2012 was $7.1 billion, compared to $7.2 billion in the second quarter of 2012. Consolidated operating income was $954 million in the third quarter of 2012, compared to $1.2 billion in the second quarter of 2012. Lower activity and higher costs in the United States land market drove these declines.
“I am pleased with the strengthening of our market position in key international geographies and in product lines where we envision strong growth in the coming years,” commented Dave Lesar, chairman, president and chief executive officer.
“We believe our international strategy is playing out as planned, as evidenced by our third quarter record revenue for both the Latin America and the Middle East/Asia regions. From a global perspective, our Drilling & Evaluation division posted record revenue for the quarter. We also achieved third quarter record revenue in four of our product service lines... Boots & Coots, Wireline and Perforating, Consulting and Project Management, and Baroid, which also had a record quarter for operating income.
Read the entire earnings report
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ExxonMobil Canada Acquires Celtic Exploration Including Liquids Rich Montney Shale Acreage
Under the terms of the agreement, ExxonMobil Canada will acquire 545,000 net acres in the liquids rich Montney shale, 104,000 net acres in the Duvernay shale and additional acreage in other areas of Alberta.
Current production of the acreage to be acquired is 72 million cubic feet per day of natural gas and 4,000 barrels per day of crude, condensate and natural gas liquids. The assets were estimated by Calgary based Celtic Exploration at December 31, 2011 to include an estimated 128 million oil equivalent barrels of proved plus probable reserves, of which 24 percent are crude, condensate and natural gas liquids and 76 percent natural gas.
Approximately 60 employees at Celtic Exploration will be given the opportunity to transition to ExxonMobil employment.
Shareholders of Celtic Exploration will receive C$24.50 per share and half a share of a newly established company which will hold assets not included in the agreement with ExxonMobil Canada. These assets include acreage in the Inga area in British Columbia, the Grande Cache area in Alberta and interests in oil and gas properties located in Karr, Alberta.
The agreement is subject to approval by Celtic Exploration’s shareholders and Canadian regulatory authorities.
“This acquisition will add significant liquids-rich resources to our existing North American unconventional portfolio,” said Andrew Barry, president of ExxonMobil Canada. “Our financial and technical strength will enable us to maximize resource value by leveraging the experience of ExxonMobil subsidiary XTO Energy, a leading U.S. oil and natural gas producer which has expertise in developing tight gas, shale oil and gas and coal bed methane.”
ExxonMobil Canada, a subsidiary of Exxon Mobil Corporation (NYSE:XOM), has a long history in Canada that dates back to the 1940s. The company is a leader in the Atlantic Canada offshore, where it operates the Sable project in Nova Scotia, is lead owner of the Hibernia project in Newfoundland and Labrador, where it is developing the Hebron project. ExxonMobil Canada has additional assets in Western and Northern Canada.
ExxonMobil’s Canadian affiliate, Imperial Oil Limited, is not a party to the transaction, but may elect to participate at a later date through its existing agreement with ExxonMobil Canada that provides for up to equal participation in new Canadian upstream opportunities. Imperial Oil Limited has advised that it is currently evaluating this opportunity.
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Tuesday, October 16, 2012
Stephen Schork: Consumer Inelasticity at the Pump Wanes
However, similar to what we saw back with the July report, it seems that the Commerce Department factored in a heavy (843 bp) upward bias in its headline figure for September. Had the Commerce not adjusted last month’s figure, then sales would have come in close to market expectations of 0.8% growth; which btw, is a healthy number.
The adjustment amounted to a $22.2 billion boost to September retail sales to $412.9 billion.
The upward dollar adjustment was 1.8× greater than last year’s figure and 1.5× greater than the 2006-2010 average. Moreover, it was the largest, by far, such adjustment of past 20 Septembers.
Retail sales data is adjusted by Commerce to account for seasonal, business day and holiday differences. To this effect, this year’s Labor Day holiday fell on the first business day of the month, i.e. September 03rd.
Given when this year’s holiday fell, there were only 19 business days this September; as opposed to 21 business days for September 2011.
As such, the Commerce Department’s statistical hocus pocus is designed (in theory) to adjust for the loss of 2 business days this September.
Bottom line, like all models, forecasts are only as good as the assumptions programed into them. Therefore, we will take the adjusted 1.1% growth in September sales as a positive for the economy. After all, the stock market loved this report… and those guys are never wrong.
Yet, just keep in mind that Commerce’s seasonal factor will subtract 423 bps from October retail sales… and, that is even before we can talk about the 5.4% spiked in California’s retail gasoline prices this month.
While we are on the subject of retail sales and gasoline, according to yesterday’s report, gasoline station receipts (unadjusted) tumbled in September as consumers turned a blind eye to the cost of whatever Apple is selling, but balked as retail gasoline climbed above $3.80 on the national average.
Receipts fell to $46.56 billion, down from $49.49 billion in August. In comparative terms, retail gasoline averaged around $3.722 per gallon in August and then climbed to $3.849 in September. In other words, a $0.127 per gallon rise in price generated a $2.92 billion drop in receipts.
If that seems counterintuitive to you, don’t fret, you are correct.
September’s receipts decoupled from the polynomial regression for this timestep, i.e. receipts were out of line with historical norms given the cost per gallon.
How much longer can NYMEX gasoline (RBOB) futures maintain these lofty levels if motorists are unwilling (or unable) to pony up when gas at the pump moves above $3.60?
Thus, we are left to surmise that in spite of strong consumer spending elsewhere in the economy, consumers pulled back at the pump.
As illustrated in today’s issue of The Schork Report we see that this event has clearly taken hold. As the real cost of gasoline rises above $3.60 per gallon, consumers respond by driving fewer miles. Therefore, fewer miles and $115/b Brent crude oil means fewer dollars on the bottom line for refiners and marketers.
This story has been provided compliments of CME Group. To request today’s FULL research note, email Subscriptions@SchorkReport.com or register for a complimentary trial here, placing CME in the source code field.
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Murphy Oil Making Big Dividend and Buy Back News
MUR also authorizes a $2.50 per share special dividend and $1 billion share buyback program, and says it’s still working to divest its U.K. downstream operations and continuing to review options with respect to "selected assets."
Murphy Oil's move to spin off its U.S. fuel making and distribution business into a new company could unlock up $5 per share in trapped enterprise value, Simmons analysts say, and "could be a sign for more aggressive moves to continue to improve the valuation in shares".
Here is today's video on the stock market and commodities talking about a possible 6-12 week pullback in stocks
Monday, October 15, 2012
Natural Gas Prices Extend Rally Amid Cooler Weather
Benchmark U.S. natural gas prices rose for the third week in a row, extending a rally to reach the highest levels since December as cooler weather boosted heating demand, the Energy Information Administration said.
Henry Hub gas as of October 10 was $3.26 per million British thermal units, up 5 cents from a week earlier. In midday NYMEX futures trading October 12, November gas fell 0.7 cent to $3.597, up 5.9%, from the end of last week. Futures earlier hit $3.638, the highest price for a nearby contract since early December.
During the week ended October 10, overall U.S. gas demand rose 6% from the previous week, led by a surge of 44% in residential and commercial use.
Working natural gas in underground storage increased to 3.725 trillion cubic feet as of October 5, an implied net injection of 72 billion cubic feet from the previous week and 6.8% over year ago levels.
Read the full report
Henry Hub gas as of October 10 was $3.26 per million British thermal units, up 5 cents from a week earlier. In midday NYMEX futures trading October 12, November gas fell 0.7 cent to $3.597, up 5.9%, from the end of last week. Futures earlier hit $3.638, the highest price for a nearby contract since early December.
During the week ended October 10, overall U.S. gas demand rose 6% from the previous week, led by a surge of 44% in residential and commercial use.
Working natural gas in underground storage increased to 3.725 trillion cubic feet as of October 5, an implied net injection of 72 billion cubic feet from the previous week and 6.8% over year ago levels.
Read the full report
Seadrill Partners SDLP Announces Launch of Initial Public Offering
Seadrill Partners intends to grant the underwriters a 30 day over allotment option to purchase up to 1,312,500 additional common units. The common units being offered to the public have been approved for listing on the New York Stock Exchange under the symbol "SDLP," subject to official notice of issuance.
Based on the number of common units to be offered, Seadrill Limited will own a 78.8% limited liability company interest in Seadrill Partners following completion of the Offering (or a 75.7% limited liability company interest, if the underwriters exercise in full their option to purchase additional common units.)
Seadrill Partners was formed by Seadrill Limited to own, operate and acquire offshore drilling rigs under long term contracts. Seadrill Partners' initial fleet will consist of two semi-submersible rigs (West Capricorn and West Aquarius), one drillship (West Capella) and one tender rig (West Vencedor).
The offering of the common units will be made only by means of a prospectus. A written prospectus meeting the requirements of Section 10 of the Securities Act of 1933, when available, may be obtained from the offices of.....Here is a complete list.
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Sunday, October 14, 2012
Natural Gas Sentiment Continuing to Change
Basis the latest inventory report the surplus declined by 651 BCF or 73% since peaking in the last week of March and 665 BCF or 71% versus the five year average for the same period. This has been a significant turnaround and one that not many analysts were predicting back in the first quarter of 2012. The combination of an above average level of coal to natural gas switching due to very low nat gas prices at the end of the winter, a very early start to a very hot summer period resulting in an increase in nat gas for cooling related power generation demand and a slow but steady reduction in the number drilling rigs deployed to the nat gas sector. In fact rigs deployed to nat gas are now at a 13 year low.
Although natural gas inventories are going to end the season at a new record high the level will be less than 2% above last year. With a more normal winter forecast coupled with supply not soaring it is likely that the price of nat gas will settle into a much higher trading range than last winter and spring. I would expect the futures market to trade in a wide range of about $3 to $3.20/mmbtu on the low side to even as high as $4 to $4.25/mmbtu on the high side if the winter weather truly materializes as forecast.
I am expecting a wide trading range as the winter forecast is uneven with mild temperatures forecast for the first part of the winter heating season (October through December) and much colder and snowy conditions predicted for the second half of the season (January through March). Certainly the forecast can change significantly as time moves forward and any repeat of last winter will change everything as prices will plummet once again as another surplus would build in inventory.....Read the entire Dominick Chirichella CME Group article.
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