Displaying items by tag: shale

Thursday, 17 May 2018 10:38

What Do Surging Oil Prices Mean?

(Houston)

Investors need to take note of the oil market, which has been spiking recently. Prices for Brent crude are now above $80 per barrel, a price that would have seemed unimaginable even a year ago, and a world away from the $20s we had in early 2016. The market is partly being driven higher by geopolitics, such as the new sanctions against Iran, but it is also a product of supply shortfalls. Higher prices are now coinciding with all the cost decreases firms made during the market rout, which is allowing them fat margins and the cash to pay dividends and pay down debt.


FINSUM: If the market can stay elevated, which seems likely for a while, then it will be transformative for the many oil and oil-related companies that have been struggling for years.

Published in Comm: Precious
Wednesday, 02 May 2018 16:50

Why Oil is Surging

(Houston)

We tend not to write too much about oil, the reason being our readers don’t seem too interested in it. However, the market has quietly seen a really resurgence over the last year or so, and has risen dramatically from lows in the $20s in 2016 to $75 now. The core reason why is that a booming global economy has pushed up demand for oil (to the tune of 5 million barrels per day), which has largely cleared the glut of oil inventories that had been plaguing the market.


FINSUM: The big question now is whether OPEC maintains the supply cuts. It is worried about higher prices inducing increased production from rivals, but the reality is that Saudi Arabia needs oil prices to stay high right now for several reasons (e.g. IPOing Saudi Aramco, domestic social and economic reforms etc).

Published in Comm: Precious
Tuesday, 13 February 2018 11:13

Why the Oil Market is Doomed

(New York)

Until the market downturn over the last couple of weeks, the oil price had been rising strongly for a period of several months. OPEC’s strategy to cut supply to the market seemed to have balanced supply and demand, which boosted prices. However, one big beneficiary of the cuts was the US shale industry, which has been boosting output to the highest levels ever. This big surge might be the ultimate unwinding of the price rise, however, as US output is surging to levels not seen since oil was at $100 per barrel. This is likely to once again flood the market with supply, sending prices back downward.


FINSUM: We think this oil output growth is unsustainable, both because it will lead to oversupply, but also because it will eventually crack OPEC’s resolve to contain their own output (as the benefits are disproportionately flowing to the US).

Published in Comm: Precious
Friday, 02 February 2018 10:20

US Oil Output Surging

(Houston)

Oil prices have been rising strongly on the global market. However, those gains took a breather yesterday when eye-opening new info emerged on the oil market—the US is now producing more than 10 million barrels of crude oil per day. The mark was hit in November, and arrived much sooner than anyone expected. The US has only broken that threshold twice in the past, both times in 1970.


FINSUM: Okay so our big concern with the oil market right now is that these higher prices are not sustainable. The fundamental oversupply of oil has not been solved. The only thing holding up prices is the fact that OPEC members, for the moment, are happy to let the US benefit disproportionately from their output cuts. This output figure might change that.

Published in Comm: Precious
Thursday, 01 February 2018 07:54

Why You Need to Buy Oil Stocks

(Houston)

So oil has staged a slow and cautious recovery over the last year powered largely by OPEC’s oil cuts. That said, prices are still ~35% below the $100 per barrel threshold. But guess what, it does not matter. In an absolutely eye-watering piece of data that is a testament to both management and technological innovation, Shell oil company is making as much profit barrel with oil at $60 as it did when oil was $100. Exxon performs even better.


FINSUM: Oil companies have done a truly commendable job rejigging their business models and cutting costs to maintain profitability.

Published in Eq: Large Cap
Page 8 of 9

Contact Us

Newsletter

Subscribe

Subscribe to our daily newsletter

Top
We use cookies to improve our website. By continuing to use this website, you are giving consent to cookies being used. More details…