Displaying items by tag: shale

(Houston)

Generally speaking, when oil prices fall it is considered good for the economy as it unleashes excess consumer spending. This is what happened in the last big drop in 2014-2015. However, this time around, there are likely to be no winners from the drop. Because the huge fall in prices is coming at a time of significantly reduced economic demand because of the coronavirus, it is hard to imagine that much excess economic activity will be created to account for the drop in oil-related industries.


FINSUM: Supply and demand are tumbling simultaneously across the economy (not just in oil), so it does not seem this will be a net positive like it has been in the past.

Published in Eq: Energy
Monday, 21 October 2019 10:52

Warren Has Spooked Energy Markets

(Washington)

Elizabeth Warren’s ascendency to being the leading candidate for the Democratic presidential bid, coupled with her strongly leftist policies, has begun spooking various sectors. Energy is ground zero. The reason why is a tweet recently fired off by Warren: “On my first day as president, I will sign an executive order that puts a total moratorium on all new fossil fuel leases for drilling offshore and on public lands … And I will ban fracking—everywhere”. If that eventuality happened, it would greatly wound the US oil industry. Entire oilfield services industries would cease to exist in the US, and Canadian shale would be the big winner, along with huge oil companies, where the price gains from the tightened supply would offset other losses.


FINSUM: Analysts estimate this would send oil prices up around 60%, but it would really hurt the US oil industry.

Published in Eq: Energy
Thursday, 15 August 2019 11:40

Why Oil Prices May Be Headed Higher

(New York)

All the signs seem to point to commodity prices headed lower. Why you may ask? Pretty simple—the economy looks to be weakening, so demand will be lower at a time when supply will stay high. But no so fast, says Evercore, who argues that oil prices may be in for a counterintuitive rise of at least 19% by the end of the year. Evercore contends that production will be flat this year, as OPEC is curtailing output. At the same time, global monetary policy easing is likely to sustain demand, meaning the basic picture for oil may be more bullish.


FINSUM: We think this is an optimistic view that does not take full account of the worsening economic outlook.

Published in Eq: Energy
Thursday, 11 July 2019 08:16

It Might Be Time to Buy This Beat Up Sector

(Houston)

We know, we know, you don’t want to hear about oil. No one seems interested in the all-important commodity at the moment, but that is exactly why you might want to pay attention. Oil stocks have had a terrible decade—down 10% while the S&P 500 rose almost 300%, hence the derision they face from investors. Prices are so low that oil now composes just 4.5% of the S&P 500, very near to the lowest ever (in 1999). The big question investors need to be asking themselves is “is this peak pessimism”?


FINSUM: We think oil stocks offer some value right now, but what will be the catalyst to make them rise? A big economic boom seems unlikely at present. Oil missed this cycle and it is still oversupplied. We would stay away.

Published in Eq: Energy
Friday, 14 June 2019 10:12

Oil to Plummet on Fears

(Houston)

Oil is looking likely to fall sharply, and not just because the world’s economy is looking soft. According to the IEA, oil supply is likely to dwarf demand next year, which will very likely lead to lower prices. Many new projects will come online, boosting oil supply far more than demand, which may only grow slightly, or even shrink if the economy heads downward. This will put more pressure on OPEC.


FINSUM: Nothing is looking bullish about oil other than geopolitical tensions (the effects of which tend to blow over quickly).

Published in Eq: Energy
Page 2 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…