OiL: $97| Key Levels LONG SHORT breakdown and lower highs with geoplotics in progress
Russia major player offering $35/barrel to select markets Inadia etc...
should tigger a price war when Shale oil starts to take effect anytime..
Shale
$MRO Oil is set for a pull back...Gap UP TWICE!!Does anyone see the issue with this?
Gap UP TWICE in less than a week....
in a very overbought state can only
mean one thing.....right??
Exxon -57% in 77 days and now BULL MARKET?Thanks for viewing.
- Exxon lost 57% in 77 days and has since bounced strongly - so are we in a new bull-market?
I would give my answer as a resounding no. Why?
- Mostly because crude oil is at 30 year lows which renders all upstream activities drastically unprofitable - how unprofitable? Some estimates of Exxon's break even price per barrel are over $70 a barrel ($74 in this article; www.theguardian.com). So each barrel produced, is produced at a significant loss. It would be far more profitable to buy crude on world markets and stop all exploration or production. This would probably not be a long-term solution, but it is being considered instead of locking in a $60 plus loss per barrel.
- It seems that at these crude prices that Exxon may even need to write down the value of all exploration and production assets to, or close to, zero. This happened recently for unprofitable shale oil producers - all their equipment was specialised, involved in a now universally unprofitable industry, with few buyers, and would have cost more to transport than would be gained from any sale - so when reality struck, it struck hard.
- If suddenly forced to re-value oil reserves they would have a negative value as the oil would cost far more to extract than to leave in the ground. The option to "just stop extraction" isn't there in some cases - as capping a well may damage the resource and incur significant future expense to re-open.
- This is a situation similar to that faced by European (and soon American) Banks due to negative interest rates; They now have liabilities on both sides of the balance sheet. The liabilities remain liabilities, but what were once assets are now cash-flow negative. Pretty hard to make money like that.
- What hope is there? Oil prices may rise, but not in 2020 I feel. So some pain will need to be incurred.
- The Fed is acting as buyer of last resort picking up corporate debt at 100 cents on the dollar with no regard to the credit-worthiness of the issuer. Although, they are not targeting individual Companies yet and Oil and Gas businesses continue to announce bankruptcy.
- The consumer (downstream) activities may still be profitable, although the overall revenue should be expected to be down.
I read two forecasts for EPS to be reported tomorrow. $0.04 from Investing.com and a consensus expectation of $0.02 from another site that had a view that prices would rise 10%. If you are bullish on earnings like that, I don't see how.
Anyway, let's see what happens. Protect those funds (I see prices below $23 before the end of '20).
Resistance Broken + Gap FillIn addition to the technicals... Iran has been hit harder than most countries by COVID-19 and its economy is creaking under merciless U.S. sanctions. With nowhere else to turn, the Iranian President, Hassan Rouhani has been forced to cede ground to hardliners. And these hardliners are determined to force Trump into a long and costly war.
Just last week, missiles were fired at a U.S. oil project in Iraq.
Then, earlier this week, a group of unidentified armed men, believed to be Iranian commandos, seized a Hong Kong-flagged tanker and escorted it into Iranian waters.
We’re long $LNG PT $42 short-term is conservative.
WLLZoomed in on WLL we can see that downside risk is very limited and upside potential is epic.
The 200 EMA 4 hour is at $4.34
200 EMA D1 is at $8.55
Price gaps from $28-$26
Price Gap from $26-$24
Price Gap from $14.67-$13.56
52 week high $31
Oil storage facilities will at full capacity by June if OPEC doesn't make supply cuts.
Descending Triangle top line being tested repeatedly. Break out seem more likely.
My bias is that the bankruptcy filing is already priced in along with the crash in the oil market. The price of this stock has been destroyed and as we already know smart money gets out way b4 retail. So the dump from $60-.29c is in my opinion proof that all these events are in fact priced in.
Oil Opens Down -25%! More downside?So did look at this chart on the weekly. We had an initial downside move after multiple higher lows and higher highs, and we were expecting a lower high swing to be made. This did not happen for many months. The 61.8 fib held, and just on Friday, we confirmed our first lower high swing because remember, to confirm a swing, we need a new lower low (in a downtrend).
Now come Sunday open, the move continued more than I expected and we cut through the first fib zone. Next fib target would be around 21... we should not see that anytime soon, but with this market volatility, anything is possible.
So I have spoken before on why OPEC production cuts do not work. Say oil is at 50, and a production cut is agreed on to take oil to 60. If the demand for oil has not changed, an OPEC member has the incentive to cheat on the deal, and produce as many barrels as they were before and sell them at 60 for more profit. Once other members find out about this, they all start producing the same as before and then price goes back to where it was and you are back to where you first began before the production cut.
What angered the Saudi's was the fact that if demand remained the same, their market share was taken away. It was taken away by Iran who supplied mostly to China and other Asian nations...the fact they accepted any other currency other than the US Dollar was helpful too...and will also increase their market share when we see the US Dollar move higher.
Now, we know there are recession fears. Many nations know that oil will be heading lower. Yes, shale did bring a lot of supply to the market. The US became energy independent, and brought on a lot of supply adding to the supply glut. And yes, bringing oil prices down will impact shale production...but more importantly, it will hurt the banks, who were forced to loan to these oil/shale companies the last time oil fell in order to prevent massive layoffs. They will pay for it now. These are zombie companies, needing more debt just to stay afloat (maybe lower rates will help them out).
So, going back to the idea that nations know oil prices will fall due to the looming recession. If you are Russia, or Iran and know this, you want to pump as much as you can now, to make as much money as you can. Media is using the shale production story, which sure might be true. However, I think Saudi Arabia doing the Aramco IPO was a telling sign of this eventually occurring.
Oil Gap Down Open To Target Level#oil #cl1! – Oil saw a gap down tonight to the target area shown in my previous chart shared this morning, and for now is attempting to hold at the lower parallel channel line that I drew which was an anticipated support level based on recent price trend. Price opened at $32.87 which is a -20.37% decline from Friday’s closing price of $41.28.
Still very early in futures trading, but I’m expecting volatility in price while waiting for US traders to digest this move overnight and make their move tomorrow at market open before sharing another update. If Saudi Arabia is determined to flood the market with oil in attempt to put US shale oil out of business, we can probably expect them to continue beating down price this week with talk of more oil output on their end in the coming weeks.
Oil Drops to 4-year LowOil fell to a 4-year low as Saudi Arabia launched a price war on Saturday with the announcement of plans to increase oil output next month, looking to boost total output above 10 million barrels a day. This will be the largest reduction seen in oil price for foreign markets in 20 years.
www.bloomberg.com
This comes as China, the #1 importer of foreign oil, ended 2019 with a 9.5% yoy increase in demand and a 17th consecutive year of record oil imports which equaled 10.12 million barrels per day in 2019. Chinese oil demand in 2020 has since fallen off due to nationwide quarantines as the impact of the coronavirus continues to take its toll on China’s economy as well as overall global economic activity.
www.reuters.com
This monthly chart shows oil falling below a 4-year support level(blue dashed line) to a low of $41.28 on Friday, a decline that is expected to continue when global markets reopen tonight.
The red lines indicate a potential downtrend channel in play, created by connecting the two upper price peaks and extending a parallel line below from the December 2018 low.
The yellow area indicates the level that oil price-per-barrel is expected to reach which would put price back to late 2015-early 2016 levels in the $25-$33/barrel range which equates to a -25% drop from current price. This yellow area stems from a previous level of support/consolidation dating back to the early 2000’s and marked the bottom in oil prices during selloffs seen in 2008/2009 as well as during the 2015 decline.
This is expected to hit US shale producers as oil-and-gas companies have more than $200 billion of debt maturing over the next four years, $40 billion of which is due in 2020.
www.wsj.com
According to the Dallas Fed Energy Survey, average breakeven prices in the U.S. range from $48-$54 per barrel which is well above the current price of $41.28.
www.dallasfed.org
NATGAS Can the Saudi's Shale Plan stop the Bears?Natural gas prices slumping nearly 40% over the past year and is showing a retracement in the Asia session.
Saudi Aramco has announced that it will be pumping $110 billion over the next couple of years to develop the Jafurah gas field, which is estimated to hold 200 trillion cubic feet of gas.
The state-owned company hopes to start natural gas production from Jafurah in 2024 and reach 2.2 Bcf/d of sales gas by 2036 with an associated 425 million cubic feet per day of ethane. The field will produce some 550,000 barrels per day of gas liquids and condensates, around 50% more than current output of just over 1 million bpd. For perspective, Aramco produced 8.9 Bcf/d of natural gas and 1 Bcf/d of ethane in 2018.
PIVOT INDICATOR STILL SIGNALLING MORE SHORT TO COME YET.
Oil Reversal Pattern, Daily Fake Out?Oil has been on a very prolonged downtrend after the market calculates affects on Chinese oil demand as parts of the country shut down. Last week the highways in and out of Beijing were shut down. It is very likely the coronavirus numbers are much worse than are reported by the Chinese government.
Oil here is showing an exhaustion in the downtrend. We seem to not be making anymore lower highs...or it is tough to make a new lower high. From here, we have a double bottom, and potentially looking for a head and shoulders too which will give us our first HIGHER LOW in the new trend.
52 is an important flip zone not only because it is the lower high swing we are playing with on the 4 hour, but is also a big daily level:
This of course is the big support level we have been watching and we are retesting this now. In this downtrend on the daily we have made 2 lower highs so it is beginning to be an extended move. Watch to see how price reacts at this level and if we can get a daily close above here.
My thoughts on oil are still the same:
Oil should be heading lower due to the supply glut and the world is slowing down. This has been my opinion before the coronoavirus and the China issues.
However, oil must be propped up because the last time oil fell, banks in America were essentially forced to provide loans to these oil/shale companies, knowing very well they won't pay them back. They were forced because it meant thousands of high paying American jobs on the line. These oil/shale companies are now zombie companies. Oil now affects the financial sector. If oil issues occur, there will also be bank issues. This is why oil will need to be propped up.
OIL: $54 Shakedown to take over Impact to Petron Total Vanguardmassive SHORTS piling up correlating to OIL STOCKS Exxon (XOM) | Toatal (TOT) | Vanguard Etf energy (VDE)
Gulfport (GPOR) this one is nasty | California Resources (CRC)
==
Warren Buffet's PSX 66 $100 should benefit from refining processing all this supply overflowing across the universe
===
Philippines Oil Play Local Philippines
anchored to ARAMCO (2222) $34 <-- $38 (-10%) from recent listing of 10% to public
PETRON: PCOR ₱4.0 <-- ₱19.98 (-80%) | Stabilization Funds layered at ₱3.50 and ₱2.80
Philex Oil: PXP: ₱8.90 <-- ₱19.70 (-54%) | Stabilization Funds at ₱8.50 and ₱7.20
AYala Energy ACEX: ₱8.40 -- ₱13.90 (-40%) Free shares similar to PXP no worries for Strong Hands towards fresh highs
Who Passed The Gas ?winter coming up, Natural Gas spot has already broken out - NGS appears to be lagging, presents a good long opportunity
low liquidity/ low market cap adds to the risk reward balance
The guys on TIP The Investor's Podcast typically have good calls, look at the BBBY returns (from $9.00)
LONG EOGExpecting bounce from extremely oversold weekly and daily levels. If stop breached, be prepared to catch new daily reversal on lower levels with a tight stop.
Chart of the Day: $CL1 completed 3-drive formation $CL1 completed a 3-drive formation which coincides with a SSR support and 61.8% retracement of the Dec'18 to Apr'19 up leg. Focus is shifting from demand issues to potential supply issues with Iranian crisis and potential for Russia to break with OPEC. Mother Russia will not break with the House of Saud as the relationship is beneficial to Russia in both economic and geopolitical terms. With Iran pushing back against Trump's maximum pressure and OPEC+1 holding firm, expect oil supply (ex-shale) to be tight and disciplined. Shale is landlocked and too light for industrial applications so expect OPEC+1 heavy sours to drive market direction.
With completion of 3-Drives, odds are for a retest of levels completed during wave 2 & 4 which would coincide with approximately the 61.8% and 78.6% retracement levels.
Chart of the Day: $HYG under pressure$85.50 is the key neckline support for $HYG as it bounces off the top boundary of wedge pattern. The neckline can be seen with multiple previous SSR levels. The downward bias is reinforced by the current SSR level for which price action is firmly pinned under.
With an earnings recession in progress and oil demand in question, it is inevitable to see some stress emerging in the junk bond segment which has a fairly high representation of US shale players.
Chart of the Day: XOM weekly chart continues downward spiralSince 2016, XOM has been trading off 78.6% lower highs with MACD cross-downs followed by an ABCD completion. No reason to think this time would be any different considering the company has a fair bit of debt, production volumes has not been all that great and recent investments in US shale may not be as rosy as previously thought.
The target for this weekly CD leg is c.$60 which is a long way down.
Tracking the highs in Crude after Supply cuts are priced inHere we are tracking a retrace in Crude after expected supply cuts are fully baked into the market.
Bulls are going overboard here, forgetting that we have demand shocks coming with the global slowdown. The impulsive leg down last year was caused from the supply side, there is very little that can be done here to get back to these levels again.
Good luck everyone trade this live.
Time to sell OILThe price is about to reach a key area of resistance to determine the trend in the very short term: between 58.80 and 59.70 a barrier has formed which is a watershed between a further climb of another 6 dollars towards the area between the $ 62/64 per barrel, or a retracement to the support at $ 52.20. The fundamental scenario that is taking shape is quite clear: according to analysts, the US is producing more oil than market demand, which remains constant (if not actually falling in certain periods). This situation is pushing investors to remain cautious with long positions on this commodity: despite the rise of the latter sessions, it is likely that the second hypothesis, (of a retracement ), is the most probable in the short term.
On the other hand, the brent is supported by a stable production cut by the OPEC countries and by production interruptions in Iran and Venezuela, maintaining a sort of balance between demand and supply . We recommend a short market entry on WTI, despite the price is close to an important pivot, anticipating the market.
Oil continues higherOil should continue its bull run higher after a short correction. Saudi's seem to be finally getting their act together, and with power consolidation, should be able to limit supply enough to continue this rebound in prices this year. Fed's higher interest rates should dampen the response from debt-laden shale producers. These should set up for long-term higher oil.
OIH Long - Time: 6-12 monthsLooking at a recovery over the next year or so. Oil recovering and breaking out over 55. Higher interest rates will dampen the response from debt-laden shale producers. Saudi's consolidation of power should add more stability to their production. TVC:USOIL
Oil weekly/daily, short term buy, long term sell (in comments)After US positive data, China possibly lowering demand and inventories with an Oil flood, the 50-55 range was broken, though these prices under 50 do not really benefit shale producers or OPEC (and therefore could not be 100% sustainable if demand doesn't decrease further), we could have a longer dip to $46 (watch weekly chart I will share) and then maybe a recovery. Fundamentals are as volatile as the market so hardly any prediction can be too exact right now.
Crude Cuts Up LongsI haven't posted about crude in a few weeks because the fundamentals and technicals simply have told the same story over and over again. Bulls get bullish because A) they believe the global economic growth falacy or B) it's so oversold it must go higher.
My charts did not change, and, yes, it has played out well technically to the downside. It is ever closer to the $42.13 longer-term trend line (purple dotted line).
OPEC... or Saudi Arabia, rather, will continue to put the big hurt on US shale plays. The EIA crude inventory report shown a surplus of 8.9 million barrels, following a increase of 10.1 million barrels the following month. The API data was even more bearish, suggesting an increase of over 12 million barrels.
US shale companies will continue to pump, even as rigs fall to multi-year lows. Even given the 120+ days of declining gas prices, demand is still not there.
Potential long accumulation could be interesting in low $42, perhaps lower. However, $80/90 barrel oil is not even going to be possible. $55/60 seems more realistic.
