Tag Archives: crude oil
Posted on 26. Jun, 2012 by Harvey Sax.
Looking at this chart makes one think that what goes up must come down. Is it possible that the super spike in oil prices has come to an end due to greater fuel efficient driven by CAFE standards and technological breakthroughs like horizontal drilling and fracking? Are we going to undergo a long period of moderate to sharply declining crude prices? Look at the Case-Shiller Home Price Indices during the same period. There is some correlation but crude went up a far greater percentage. Is this all emerging market demand and supply issues? Is there more speculation than meets the eye?
Posted on 22. Feb, 2012 by Wilensky.
While Iran’s willingness to reopen talks with the International Atomic Energy Agency about their nuclear program was a surprise, it seems that the motion was mostly for show. Several rounds of discussions yielded no access to a military site in Parchin which is suspected to be a weapons development facility. There has been no agreement on further discussing the matter. Light crude is hovering close to $106 a barrel today, so much for Prince Alwaleed’s promise to keep oil under the $100 a barrel mark.
“The International Atomic Energy Agency has reported that it held a “disappointing” meeting with Iran this week over the country’s nuclear programme, with no agreement reached on any of the key issues under discussion. After a two-day meeting in Iran, IAEA officials returned to the UN watchdog’s headquarters in Vienna on Wednesday and indicated that talks with Iranian officials had made no progress.”
Posted on 23. Jan, 2012 by Wilensky.
As promised, the European Union followed through with their promise to ban all oil imports from Iran today in an effort to halt the country’s nuclear development program. The halt on oil was accompanied by a number of other provisions including sanctions on trading with their central bank. Just days after the US, French, and British militaries sent a flotilla of warships through the gulf, the combined effect of the ban and military actions are sure to add pressure to our already tense relationship with Iran who reiterated their threat of a closure of the Strait of Hormuz. Markets responded with a more than 1% jump in the price of Brent futures, surpassing the $111 a barrel handle. Although the situation is seemingly bullish for oil, investors should remain cautious of the high exposure to headline risk.
See more here: EU bans Iranian oil, Tehran responds with threats | Reuters.
Posted on 11. Jan, 2012 by Wilensky.
Index Funds, Where Are We Now?
While following important economic news as it continually streams through headlines, its akin to wrapping your mouth around a fire hose to quench your thirst; however it’s essential to consider how these developments are affecting your investments. Take a look at how a couple of major indexes and index funds have performed since the beginning of the year…
PowerShares DB US Dollar Index Bullish (NYSE:UUP) -1.53%
SPDRS S&P 500 Index (NYSE:SPY) -1.22%
PowerShares QQQ (Nasdaq:QQQ) 0.94%
Europe, Australia-Asia iShares MSCI EAFE Index (NYSE:EFA) -15.77%
United States Oil (NYSE:USO) -1.82%
iShares Comex Gold Trust (NYSE:IAU) +9.57%
iShares Barclays 7-10 Year Treasury (NYSE:IEF) +12.70%
The S&P 500 index, as tracked by the SPDRS S&P 500 Index fund, has fluctuated over the year; however, this fund did start to rise in recent months as investors moved in. From the beginning of the year to now, the S&P 500 (as well as the DJIA) has at times seen gains of close to 10%. However, for 2011 the performance has just below zero. (For a complete guide, check out our Index Investing Tutorial.)
Pullbacks and Producers
Gold futures prices, followed by the iShares Comex Gold Trust fund, have continued to trade at record highs. IAU has recently settled at $15.70.
Technology is currently flat compared to the beginning of the year as top PowerShares QQQQ fund holdings like Apple (Nasdaq:AAPL), Qualcomm (Nasdaq:QCOM) and Google (Nasdaq:GOOG) are all flat as well.
Posted on 26. May, 2011 by Harvey Sax.
This is a checklist I use to quickly come to a conclusion on a stock. I score a stock, each line getting a 1, 0, or -1. A stock that scored 1 on each line would be a perfect 10. Buy it!
Some of these items are quite subjective. For example how would I score Cash Flow? If a company’s cash flow is much lower than it’s reported earnings, that raises a flag and I would score it a -1. If there are more insiders buying than selling, I would score it a 1. If there are no apparent catalysts in the near future I would score it a 0 but on the other hand if there is a pending secondary that will put more stock out on the market, I would score it -1.
- CHART- know how to read charts. I firmly believe I can improve the price of buying or selling from an understanding of chart action. A good chart gets a 1, a bad one, -1 and inconclusive is 0 RSI is diverging in a bullish chart so I give this a 1
- ANALYSTS- read analyst reports but come to your own conclusions. If the consensus is favorable, 1; if unfavorable -1, and mixed 0. Analysts are generally bearish on this stock with 2 strong buys, 3 buys, 20 holds and 2 sells. You have to understand in Wall Street speak a “hold” is analyst speak for “I wouldn’t buy this now”. -1
- INSIDERS- if the people that know the company the best are not buying it, why should you? This one gets a positive mention since the CEO recently bought 10,000 shares at prices close to where it is trading now. 1
- MANAGEMENT DISCUSSION 10Q AND 10K- this is the only truthful thing you will read about a company. It’s composed by management, the auditors, and the firm’s lawyers. If all three of them can agree on the verbiage, it’s passed a big hurdle. Read it carefully. Pay particular attention to the Risks, Litigation, and Related Transaction sections. These are the things you will wish you had taken the time to read if something goes bad with your investment. The Company has three reportable segments, sub sea and well enhancement, drilling products and services, and marine. The well-known delays in permitting in the Gulf of Mexico have hurt operations ( decline of 47% in the Drilling products and Services Segment) although revenues involved with greater safety procedures have aided that shortfall somewhat. For the most recent quarter ending 3-31-11, revenues increased year over year but income declined. -1
- MARKET DIRECTION- 80% of stocks follow market direction in the short-term. This is your read on the market. Don’t have an opinion, it’s a 0. Market is near term oversold but I’m not decisive here. Give it a 0
- SECTOR OUTLOOK- buying a good stock in a bad sector can be a humbling experience. SPN is a large oil and gas services company. This was one of the strongest sectors of the market this year.but the last three months have not been positive 0
- CASH FLOW- cash flow is more accurate than earnings. Earnings can be more easily manipulated. Cash flow rose in the last quarter and is nearly 10 times earnings. The company depreciates a large amount. This was primarily due to accounts receivable management and income tax payments. The company looks cheap on a multiple of cash flow less than 6x but I believe the depreciation numbers are real and cannot be discounted. I give this a 0
- PEG RATIO- it’s good to find a company growing faster than it’s multiple. Peg Ratio os 1.29. Anything less than 1 is a positive. I give a -1
- VALUATION- contrary to popular opinion, valuation does matter. Use a discounted cash flow analysis. If the stock is trading for substantially less than its DCF, that’s a 1. According to inputs from Valuepro intrinsic stock value is $16.34 where as S&P using two models pegs it between $32 and $40 Give it a -1 as it’s too close to its ISV.
- CATALYST- what’s going to change the status quo? My guess this is the secret to why the CEO recently bought stock on a pullback. There could be a good pipeline of business developing the Gulf both from well remediation intervention and new drilling activities. +1
Conclusion: Superior Energy Services is a global company and will be highly sensitive to the prices of oil and gas. It has three operating divisions; sub sea and well enhancement, drilling products and services, and marine. The well-known delays in permitting in the Gulf of Mexico have hurt operations but they may be coming to an end and could actually be a net positive going forward. The final score is -1. It might be good for a trade (I’m pretty sure it is and I’m taking the money and running but I’m not committing to it. )And I admit I’m obviously missing what the CEO saw when he bought 10,000 shares recently. If the net operating margins return to 17% levels as they did in 2006-08 the stock could be worth closer to $70.
Trading the markets is a humbling experience. I hope this handy checklist makes it less so.
Posted on 11. May, 2011 by David Spinowitz.
Feeling the fury of this bipolar market, the liquidation surge has arrived, right at the front door of the commodities family, with an emphasis on crude oil, gas, and silver. What started off as a sharp correction in silver is quickly turning into a sell-off of historic proportions. With a four-day decline of almost 30% the selloff in silver is one of the most severe selloffs in the history of the metal’s futures contract. Sheer panic at the CME, 5 margin hikes in 8 days on Silver futures, is unheard of!!
Although we saw signs of a recovery early this week, it was Deja vu in the commodities markets today, with another flash crash similar to the one last Thursday. Crude-oil futures settled below $100 a barrel Wednesday, and gasoline plunged nearly 8%, after the CME Group briefly halted trading in oil, heating-oil and gasoline futures on the New York Mercantile Exchange after the June gasoline contract hit its daily price limit. The CME also boosted daily price limits for crude oil to $20 and for heating oil and gasoline to 50 cents. According to James Williams, an economist at WTRG Economics “A short trading halt only occurs when there is high volatility in the price to give the market a little breathing space.” (more…)
Posted on 10. May, 2011 by Ron Rowland.
The fund’s 61 holdings are weighted by float-adjusted market capitalization. While no stock is supposed to exceed a 10% allocation at the quarterly rebalancing, presently no holdings need to be capped. The largest position is Sunoco Inc (SUN) at 6.2%, followed by Oceaneering International Inc (OII) 5.3%, Core Laboratories (CLB) 5.2%, Tesoro Corp (TSO) 4.5%, Petrominerales Ltd (PMGLF) 4.3%, and Alliance Oil Company Ltd (ALLZF) 3.9%.
The IOIL portfolio currently spans 14 countries, including both developed and emerging markets. I was somewhat surprised to see Thailand with the third largest allocation but Russia and Mexico not represented at all. My guess is that this reflects the large size of oil-related companies in those places. The rest of the list was no surprise with the U.S. at 45.1%, Canada 11.7%, Thailand 7.5%, Colombia 4.3%, Japan 4.0%, Sweden 3.9%, U.K. 3.9%, Finland 3.0%, and six others combining for 13.5%.
Posted on 28. Mar, 2011 by Ron Rowland.
Global X launched a new equity ETF on Tuesday (3/15/11) that attempts to achieve high correlation to crude oil spot prices. Global X Oil Equities ETF (XOIL) provides exposure to pure-play oil companies with significant oil reserves that are typically not involved in other industries such as natural gas or downstream operations.
The underlying Solactive Global Oil Equities Index tracks the performance of 25 equal-weighted companies that have shown a high correlation to the spot price of oil. Constituents are ranked and chosen by their correlation to the spot price of oil in the quarter preceding the selection day. The index has a global mandate, but only North American stocks passed the most recent correlation screen with 80% currently allocated to the U.S. and 20% to Canada. (more…)