Tag Archives: Oil

Daily News Breakdown 8/18/2015

18 Tuesday Aug 2015

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  • Daily Market Update
    • The Dow ended the day down 33.84 points or approximately 0.19%.
    • The S&P 500 ended the day down 5.52 points or approximately 0.26%.
    • The NASDAQ ended the day down 32.35 points or approximately 0.64%.
    • Oil ended the day up $0.75 at $42.62 a barrel.
    • Gold ended the day down $1.50 at $1,116.90.
  • Russia Agrees to Sell Air Defense to Iran

As soon as next week Iran plans to sign a contract with Russia for four S-300 Surface-to-air systems.  In the emerging cold war between the West on one side and Russia and China on the other; this sale is clearly an attempt by Russia to gain a political ally in the Middle East as Iran continues to gain a dominate political foothold in the region.

  • Test Vote Proves Positive for Merkel

In a test vote by German Chancellor Merkel results showed a majority in favor of the current bailout proposal.

  • Islamic Climate Declaration

In a move certainly to irritate Saudi Arabia a collation of Arab religious leaders have called on oil rich Arab countries to stop oil production and to move 100% to renewable energy by 2050.  The declaration has already received support from the Grand Muftis of Uganda and Lebanon.  Along side the recent G-7 declaration this is further proof of the coming end of oil dominance in favor of renewable energy.

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Daily News Breakdown 8/14/2015

14 Friday Aug 2015

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  • Daily Market Update
    • The Dow ended the day up 69.15 points or approximately 0.40%.
    • The S&P 500 ended the day up 8.15 points or approximately 0.39%.
    • The NASDAQ ended the day up 14.68 points or approximately 0.29%.
    • Oil ended the day up $0.27 at $42.18 a barrel.
    • Gold ended the day down $2.90 at $1,113.20.
  • The United States Allows Restricted Oil Exports to Mexico

The United States will allow 100,000 barrels a day of light oil that is drilled in the United States to be exchanged for heavy crude from Mexico.  This is a major shift in United States policy as previously only Canada was allowed to export oil from the United States.  The shift is certainty because of the oil drilling boom in the United States and because of the low prices that oil is now demanding.  For more information click here

  • Keyless Cars Can Be Hacked

According to research that Volkswagen has been attempting to keep hidden through court fillings for the past two years the Radio-Frequency Identification (RFID) transponder chip has had a security flaw that allows hackers to access the cars.  The hack has been found to be responsible for 42% of all stolen vehicles in London.  This flaw was known since 2012 but before it could come to light Volkswagen sued to keep the research from the public.  For more information click here

  •  The United States Raises Flag Over Cuban Embassy

The United States reopened its Cuban Embassy after over 54 years of its closer during the cold war.  This symbolizes the reinstatement of diplomatic ties between the two countries as President Obama’s administration calls for the lifting of the embargo, something Republicans have blocked.  For more information click here

Daily News Breakdown 8/12/2015

12 Wednesday Aug 2015

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  • Daily Market Update
    • The Dow ended the day down 0.33 points or approximately 0.00%.
    • The S&P 500 ended the day up 1.98 points or approximately 0.10%.
    • The NASDAQ ended the day up 7.60 points or approximately 0.15%.
    • Oil ended the day up $0.22 at $43.30 a barrel.
    • Gold ended the day down $15.90 at $1,123.60.
  • China Blast Kills at Least 17 People

Two blasts rocked the Chinese port of Tianjin on Wednesday as over 300 people were injured and at least 17 people were killed including four firefighters.  The first blast was approximately three tons of TNT while the second was approximately 21 tons of TNT.

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Source: The BBC

The Chinese State controlled broadcaster China Central Television announced that a shipment of explosives had detonated.  However, like all news that comes out of China this cannot be independently verified.  The truth is we will most likely never know what happened on Wednesday.  For more information click here

  • More News From Today

For the rest of today’s earlier news click here

Mid-Day News Breakdown 8/11/2015

11 Tuesday Aug 2015

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  • Dow Drops

The Dow is currently down approximately 218 points as Wall Street attempts to understand the move by China yesterday to devalue the yuan against the dollar.  The move by the People’s Bank of China is thought to be in response to China’s abysmal July export number.  This move by China clearly shows just how worried China’s ruling elite are about China’s economy.

  • Oil Drops Again

At one point today oil was down below $43 in a move not see since March.  The downward progression made by oil today was in response to concerns about weaker demand from China and an increase in production from Iran.  For a more detailed analysis click here

  • GOP Tries to Gain Support for an Iran Veto Override

The GOP House leader said in an interview in Jerusalem that there is a chance for a President Obama veto override as the debate regarding the Iran Nuclear deal continues to heat up.  Congress is almost certainly not going to pass the deal and with President Obama saying he will veto any resistance from Congress the GOP has been trying to get enough support to override a veto.

  • After All Night Negotiations Greece Has a Deal

While Greece has a deal negotiated with European Union heads of state, the deal still has to be ratified by Greece’s parliament in which the Syriza party, who oppose austerity, currently hold a majority.  Due to this fact I am not confident that the deal will indeed pass through parliament.  For a more detailed analysis click here

Daily News Breakdown 8/10/2015

11 Tuesday Aug 2015

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  • Google is now Alphabet

Google announced on Monday that they were forming a parent company called Alphabet.  Don’t worry this is not a splitting of the company Google, but rather a more streamlined consolidation of the company as a whole.  As we have seen recently Google has become more of a Berkshire Hathaway than just a search engine as they have dabbled in everything from cars to extending life indefinitely.  But what does this mean for investors?  In truth not much in the short-term; investors who currently own Google will just have their shares transformed into Alphabet stock and will keep their current number of shares.  However, in the long run we can look forward a company that is more focused as the parent company structure allows each department to coexist separately rather than a jumbled mess.

For a more detailed analysis from Jim Cramer click here

  • Shake Shack Earnings Beat the Street

Shake Shack released its Q2 2015 earnings on Monday and destroyed Wall Streets estimates of 3 cents per share on $43 million in revenue with $48.5 million in revenue on 9 cents per share.  The stock, in after hours trading, is up 7.73%.

  • People’s Bank of China Lets Yuan Depreciate

The PBOC set Tuesday’s Midpoint at 6.2298 per U.S. dollar which is a decrease of approximately 2% from Monday.  For a more detailed account click here

  • Gold Above $1,100 Again

Gold reached as high as $1,108.80 on Monday the highest price since July 21, 2015.  This was due to a less than expected jobs number released last week.

  • Oil Ends the Day Up

Oil ended the trading day Monday up 2.48% at $44.96.  This was due to an outage at a refinery in Whiting, Indiana due to a malfunction on Saturday.  However, the rally was short-lived as oil is now down 0.80% at $44.60.  The rally on Monday should not cause anybody to think that oil has hit the bottom.  Always remember to look at the bigger picture; in this case Saudi Arabia, Iran, and United States’ drillers.  Oil has not reached its bottom and I would not care to guess where that is until we receive accurate and definitive numbers out of Iran.

  • Kyushu Electric Power Restarts Reactor At Sendai Plant

After the 2011 Fukushima disaster all of Japan’s nuclear plants were shutdown for safety inspections and evaluations.  Since the plants were shutdown Japan began to rely on the importation of fossil fuels to power the country.  Even though over $100 million has been spent on fitting new safety equipment to the reactor there are still large protests over the restart of the power plants as Japan is in an earthquake prone area.

  • Australia to Cut Emissions

Australia has pledged to cut greenhouse gas emissions by 26% to 28% below 2005 levels by 2030.  As more countries pledge less reliance on fossil fuels is this the end of oil dominance?  I think so.  For more information please click here

The Price of Oil and Q2 Reports

10 Monday Aug 2015

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There are a number of earnings reports coming out this week and with oil ending today below $45 I decided to discuss the potential impact of the price of oil on some of the companies releasing their Q2 2015 reports.

Recently the price of oil has crashed with a 52-week high of $93.34 to a 52-week low of $43.35; oil has dropped 22.70% in 2015 alone.  This has caused some obvious losers like oil and natural gas exploration companies but what about the not so obvious winners?  In Q1 2015 the average price of WTI crude was $48.54 this helped companies like Air Canada post record breaking profits.

Statista

One of the driving forces behind their outstanding quarter was the drop in the price of oil.  In Q1 2014 the cost of aircraft fuel was approximately 25% of total operating expenses of CAD$3.127 billion.  In Q1 2015 the cost of aircraft fuel was approximately 19% of total operating expenses of CAD$3.049 billion.

Q1 2015 is in gray Q1 2014 is in white (dollar amounts in Canadian Dollars)
According to the chart above the only operating expense that dropped significantly was Aircraft fuel decreasing by CAD$201 million a significant contributor to their CAD$78 million total operating expense improvement.
In Q2 2015 the average price of oil increased to $57.84 or an almost $10 increase.  This is important to keep in mind that while oil has been significantly down this year one should not expect the same savings on the price of fuel in Q2 2015 that we saw in Q1 2015.
I still believe that the price of oil has a long way to go before we see the bottom, with Iran potentially coming into the marketplace nobody knows in six months what the surplus of oil and gasoline is going to be.  For now lets all look forward to saving at the pump and seeing companies with high fuel costs post significant decrease in operating costs.
  • Industries with high fuel costs
    • Airlines
    • Waste Management
    • Transportation
    • Etc.

Daily News Breakdown 8/7/2015

08 Saturday Aug 2015

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  • Oil:
http://data.cnbc.com/quotes/%40CL.1
               Oil ended down $0.79 today for a final price of $43.75 or 1.77% below Thursday’s closing price.  The 1.77% drop was due to mounting concerns over a growing surplus in fuel as summer comes to a close.  In addition six oil rigs were added this week by United States energy firms for the third straight weekly increase.  This is despite the massive slump in oil prices driven by Saudi Arabia and the United States refusing to cut production as well as Iran’s potential entrance into the marketplace as international sanctions may be lifted.
  • Gold:
http://data.cnbc.com/quotes/%40GC.1/tab/2
Gold prices rose above $1,090 again to end at $1,093.30.  The brief, 0.37% rise was due to a less than expected United States jobs number.
  • United States July Jobs Report:
In July 2015 the United States economy added 215,000 jobs.  The majority of the increase came from the retail trade, health care, professional and technical services, and financial services sectors.  While this jobs report put the official unemployment rate at 5.3%, a seven year low, it still missed the analyst expectations of 225,000 jobs.  With that said, the miss of 10,000 jobs is minimal and shows that the economy is still on track.
  • Greece Migrant Crisis:
The situation of refugees from the Middle East and Africa coming to Greece has been declared “total chaos” by the UN refugee agency UNHCR.  With the economic crisis happening in Greece currently they cannot begin to deal with the 50,000 refugees that came to Greece in July of 2015.  This is just another nail in the coffin for the Greek government as the rest of Europe has balked at the thought of helping countries like Greece and Italy deal with the humanitarian crisis at the doorsteps of Europe.
  • Brazil’s Inflation Crisis:
With electricity costs rising inflation in Brazil has hit a 12-year high of 9.56% and with the International Monetary Fund predicting a 1.5% retraction in the Brazilian economy this year things are not looking very bright for the socialist country.  Adding to the countries hardships is the debt reduction plan consisting of cutting government spending and increasing taxes.