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Scottrade does not list any symbol for WTI. I already asked them about this and they said Scottrade is not big in commodity trading.
Why OPEC Will Cut Production
Feb. 12, 2016 12:45 PM ET|
Summary
OPEC has had a difficult time recently with oil prices falling to lows not seen in more than a decade.
American oil producers have felt the damage and OPEC should understand that by now.
I recommend opening an investment in the industry by looking at oil ETFs or solar stocks.
Introduction
Every few days it seems like oil prices make some recovery based on a proposed discuss between OPEC members. With OPEC historically cutting production in the face of a drop of oil prices, the current oil crisis is commonly considered something out of the ordinary.
OPEC - The Odyssey Online
OPEC is definitely hurting though. The company has an impressive share of the world's production and many of its members require noticeably higher prices to balance their budgets. With the U.S. oil companies already significantly affected, it is worth knowing that never again will money be so easily available to American oil companies.
OPEC Discussion
Before we talk about what OPEC needs, it is best to start by discussion OPEC overall. OPEC, known as the organization of petroleum exporting countries, is a group of oil countries that controls a significant percentage of the world's oil reserves. Together, these countries make output decisions that affect the world's supply.
OPEC Reserve Share - Energy Tribune
The reason for OPEC's control comes from two main things. The group controls 79.6% of the world's oil reserves but only 30% of the world's oil production. As a result, the company has the share of production necessary to make a difference in the global oil markets. The majority of these reserves come from Venezuela and Saudi Arabia, followed by Iran, Iraq, and Kuwait.
OPEC Oil Price Changes - New York Times
At the same time, OPEC's lack of decision has led to a devastating fall in oil prices. In 2007, oil prices hit a high of approximately $150 per barrel before rapidly dropping to just over $30 per barrel during the financial crisis. At this time, OPEC chose to cut production by several million barrels per day leading to a rapid recovery.
However, this crash was not caused by increasing OPEC production or decreasing world demand. Instead, it was caused by rapidly increasing American production. As a result, OPEC chose not to cut production with the goal of driving American producers from business, many of whom need oil prices more than double current prices.
OPEC Breakeven
Now that we have an overview of OPEC, let us start by talking some more about OPEC's breakeven costs.
OPEC Breakeven Prices - Filmers To Farmers
The above image shows OPEC's breakeven costs as of Jan. 1, 2015. While Saudi Arabia looks to cut spending, it still has to keep a heavily suppressed populace happy, and the country has almost 29 million people it needs to keep happy. Many of these countries need oil prices of more than $100 per barrel to break even. Current oil prices are just under $30 per barrel.
The effect of this spending is having a noticeably strain on these companies. Saudi Arabia's net foreign assets have been dropping at almost $8 billion per month meaning the company has only 5-6 years of reserves left. While the company's Saudi Aramco IPO might raise much needed cash, it is a show of desperation that might not be best for the country.
More so, compared to other countries, Saudi Arabia has the best situation. Other countries like Libya, Venezuela, Iran, and Nigeria are in much more need of cash. Non OPEC producers such as Russia might be looking to get in the action and make a deal to cut production. A relatively minor production cut of 1-2 million barrels per day could easily push oil prices back up to $60 or more barrels per day.
OPEC History
OPEC Oil Production Changes - Oil Price
Now we have a firm understanding of OPEC and the breakeven price OPEC requires, it is time to talk some more about OPEC's history of production cuts along with the country that has been doing most of the production cut heavy lifting, Saudi Arabia. In fact, most other countries have been increasing production while Saudi Arabia has had to cut production.
However, it can clearly be seen that OPEC cutting production, even during hefty production cuts has brought an eventual recovery to oil prices. Despite this, the late-80s, and 90s bear market in oil was very significant with major price cuts not causing a recovery in prices. Should the same situation occur, the countries of OPEC will be without production and earnings.
OPEC Production Cut
So far, we have established an overview of OPEC, the countries breakeven price, and the company's history. So now to talk about the reasons for a production cut.
First, the company's goal of managing American production has been accomplished. Companies that once had multi-billion dollar market caps and enormous followings are now on the verge of bankruptcy. Companies like Linn Energy (NASDAQ:LINE), Breitburn Energy Partners (NASDAQ:BBEP), and Seadrill (NYSE:SDRL) are close to bankrupt.
More so, unlike last year at this time, it is no longer the small oil producers with high leverages feeling the pain. ConocoPhillips (NYSE:COP) has had to do what was once the unthinkable for a major and cut its dividend. Many would agree that should the current pricing environment continue for much longer, the long loved dividend aristocrat Chevron (NYSE:CVX) might be forced to lose its aristocrat status.
In fact, the crash has been so tough and so fast that banking stocks like Bank of America (NYSE:BAC) have seen their share prices fall on fears that their exposure to energy loans will cost them dearly. This is to the energy industry what 2008 was to the financial industry. These companies have learned that crashes can hit hard and fast and will be more careful about major projects in the future.
More importantly, the highly leveraged American producers that caused production from shale, fracking, and other discoveries to rise so hard so fast will never again find money so easily available. Instead, they will be forced to grow at a reasonable rate off of their own earnings.
Now that OPEC has gotten its message across, it is time to pay attention to its own members that are hurting. The cartel does not even need to bring prices back to $100+ a barrel like they were previously, a recovery to $70 per barrel would be a blessing to their checkbooks without resulting in a substantial ramp up of American oil.
For those interested in investing, I would only recommend entering if you are here for the long term. For now, I would recommend investing in broad energy ETFs unlike to be affected by the bankruptcy of any one company along with investments in solar.
Solar utility costs are down to less than $0.05 / kWh, now competitive with many other forms of energy and as climate change becomes a bigger deal, solar will see burgeoning investment. More so, solar has been irrationally tied to oil despite the fact that many have not seen their electricity costs decrease from the current crisis making solar, still, a viable alternative.
Conclusion
OPEC despite its enormous currency reserves has been facing the same pain felt by every other oil producer. The fact that Chevron or Exxon Mobil (NYSE:XOM) doesn't have the $750 billion Saudi Arabia does to cover its costs doesn't mean that Saudi Arabia isn't feeling the effects just as hard.
Oil is expected to recover for the long haul, no one thinks that five years from now, oil prices will still be $30 per barrel. In fact those who invest now, if they can figure out where to invest, will be able to make a solid return.
For long-term investors, I recommend looking at solar. Despite a minimal earnings correlation with oil, many solar stocks are near their all time lows since the start of the crash. As a result, these stocks will see an impressive recover when oil recovers.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.
4 reasons oil is rocketing to its best one-day gain in 7 years
By Myra P. Saefong (Marketwatch)
Published: Feb 12, 2016 2:01 p.m. ET
Talk of output cuts, high volume and technical trade support prices
Comments from U.A.E. Energy Minister Suhail al-Mazrouei are part of the reason for Friday’s rally.
Oil futures are soaring Friday. West Texas Intermediate crude was poised for its best one-day percentage gain in more than seven years.
In afternoon trading, WTI crude for March delivery CLH6, +11.29% jumped by $2.98, or 11.4%, to $29.19 a barrel on the New York Mercantile Exchange, rebounding from a nearly 13-year low a day earlier. Prices haven’t settled with percentage gain that high since January of 2009, according to FactSet data. April Brent crude LCOJ6, +9.05% was also up $2.64, or 8.8%, at $32.70 a barrel.
So what’s behind the latest move? Analysts offered 4 key reasons:
A renewed possibility of coordinated production cuts
United Arab Emirates Energy Minister Suhail al-Mazrouei said that members of the Organization of the Petroleum Exporting Countries are ready to cooperate on a cut in crude production, The Wall Street Journal reported late Thursday.
The market is taking the comments from the U.A.E. minister “seriously because the U.A.E. is doing an about face,” said Phil Flynn, senior market analyst at Price Futures Group. The country was “saying a month ago a cut was going to be over their dead body basically,” said Flynn. “Well, maybe hell froze over.”
Venezuela, meanwhile, proposed that OPEC and non-OPEC producers should at least freeze output at the current level.
But even if global production freezes at current levels, the storage crisis for oil won’t be resolved, said Richard Hastings, a macro strategist at Seaport Global Securities.
Read: Oil industry woes grow as storage levels hit ‘critical level’
If, instead, OPEC reduces production from 32.3 million barrels a day to 31.5 million barrels a day, then “this fixes the problem quite a bit more,” said Hastings.
But why would the OPEC leadership do that “when they believe the upcoming storage crisis would achieve the same outcome, without any pain to their biggest members like Saudi Arabia and Iraq?” he said. “Without confirmation of a production cut—and we mean immediately—then this rally should not [be] followed upon.”
Signs of falling production
The market has seen some signs that the low prices for oil are causing producers to cutback on output.
“Although only a small loss of 4,800 [barrels a day], the first closure of a Norwegian oil field—the Varg oil deposit—in the North Sea is evidence that OPEC’s tactic of trying to flush out higher-cost production is starting to work,” said Matt Smith, director of commodity research at ClipperData.
Meanwhile, reports from the U.S. Energy Information Administration this month have shown weekly declines in total U.S. crude output and expectations for a fall in March oil production from seven major domestic shale plays.
On Friday, data from Baker Hughes Inc. BHI, +0.68% showed that the number of active U.S. rigs drilling for oil fell for an eighth week in a row. The oil-rig count was down 28 to 439.
Oil companies have also shown obvious signs that they’re suffering from the price rout. Earlier this month, Royal Dutch Shell RDS.A, +3.10% RDS.B, +2.96% said low oil prices forced it to slash 1.4 billion barrels from the volume of oil and gas it expects to develop.
Also read: Oil glut drains Exxon, BP earnings
Technical rebound
Oil prices have managed to climb above price resistance levels.
“Both contracts have turned higher from key technical level, with Brent holding its own above the psychological level of $30 which is also the 61.8% Fibonacci retracement of the most recent upswing,” said Fawad Razaqzada, technical analyst at Forex.com.
“At this stage, it should be treated as just a technical oversold rebound, but if we create new highs above the recent range then that would confirm a change in the trend.”
Similarly, Naeem Aslam, chief market analyst at AvaTrade, said that the resistance of $31.50 is the primary headwind for WTI oil.
A close above the $30 mark will “signal that the bulls are back in control of the price,” he said.
Still, Aslam was wary. “The drop will be as significant as the surge is—that is all [that] traders need to keep in mind,” he said.
Read: Will oil be so cheap that it won’t pay to pump it out of the ground?
High volume
The high volume of contracts traded on the Nymex recently has made prices much more volatile, exaggerating the moves either up or down for oil.
WTI crude has set volume records on Nymex in each of the past three sessions, according to Tim Evans, energy analyst at Citi Futures and OTC Clearing. “We see this heavy trade as certainly contributing something to the price volatility.”
The CME Group said Wednesday that trading volume for WTI crude on Tuesday was at about 1.603 million contracts, compared with a previous record of nearly 1.595 million contracts on Dec. 8, 2015.
I added more UWTI this morning at 1.32.
Oil industry woes grow as storage levels hit ‘critical level’
By Myra P. Saefong
Published: Feb 8, 2016 5:23 p.m. ET
Bloomberg
Storage tanks at Cushing, Okla. are filling up.
The storage tanks at Cushing, Okla., the delivery point for the New York Mercantile Exchange crude contract, are edging closer to their limits, raising a new set of problems for an industry that has already suffered from a 70% drop in prices in the past year and a half.
Cushing, which represents about 13% of the nation’s oil storage, has a working capacity of about 73.014 million barrels of crude oil, according to data from Sept. 2015, the latest available from the Energy Information Administration.
U.S. Energy Information Administration
As of the week ended Jan. 29, there was 64.174 million barrels of oil in storage at Cushing, so it is at about 88% full.
“Where inventories count the most—at the Nymex terminal complex in Cushing, Oklahoma—storage is already at a critical level,” said Stephen Schork, in The Schork Report published Monday. “Approximately 6 out of 7 barrels available storage capacity at the Nymex hub are now full.”
The report highlighted an article from Reuters that discussed delays in crude deliveries from storage tanks at Cushing because there wasn’t enough room to drain existing tanks to blend oil to meet West Texas Intermediate crude CLH6, +1.38%specifications.
Cushing serves as a blending station, where crude oil from the midcontinent is mixed to the specific grades required by different refineries, according to StateImpact Oklahoma.
‘We soon might be in a situation that we have so much oil, that we don’t have enough of the right kind of oil.’
Stephen Schork, The Schork Report
“We soon might be in a situation that we have so much oil, that we don’t have enough of the right kind of oil,” Schork said.
But that’s not the only problem.
Richard Hastings, macro strategist at Seaport Global Securities, said building more tanks would take time and there would be questions over how the cost of tanks would be shared across the supply chain.
Meanwhile, the market is dealing with a “constant high volume” of crude oil coming from the floating storage at the Gulf Coast, the Canadian crudes coming by rail to the U.S. and domestic production, said Hastings.
“If the volumes get too high, then the intermediate delivery steps—moving large volumes from tanks to pipelines—could be difficult if the local hub’s pipeline capacity is constrained,” he said.
Hastings doesn’t expect Cushing to ever reach its working storage capacity because crude oil would back up in the rest of the Midwest, especially the Gulf Coast, instead.
“It’s the pipeline connections from Cushing to the Gulf Coast refiners that make the Cushing-Gulf Coast dynamics pretty obvious now,” he said. “Cushing capacity problems will push Gulf Coast volumes higher, which in turn create pricing problem for major global benchmarks.”
Ironically, in a MarketWatch story published nearly a year ago, analysts forecast that with the U.S. running out of space to store its glut of crude-oil supplies, prices for the commodity could sink to as low as $30 a barrel.
Read:Storage dearth may drive oil prices to $30
On Monday, WTI oil futures settled at $29.69 a barrel
Oil industry woes grow as storage levels hit ‘critical level’
By Myra P. Saefong
Published: Feb 8, 2016 5:23 p.m. ET
Bloomberg
Storage tanks at Cushing, Okla. are filling up.
The storage tanks at Cushing, Okla., the delivery point for the New York Mercantile Exchange crude contract, are edging closer to their limits, raising a new set of problems for an industry that has already suffered from a 70% drop in prices in the past year and a half.
Cushing, which represents about 13% of the nation’s oil storage, has a working capacity of about 73.014 million barrels of crude oil, according to data from Sept. 2015, the latest available from the Energy Information Administration.
U.S. Energy Information Administration
As of the week ended Jan. 29, there was 64.174 million barrels of oil in storage at Cushing, so it is at about 88% full.
“Where inventories count the most—at the Nymex terminal complex in Cushing, Oklahoma—storage is already at a critical level,” said Stephen Schork, in The Schork Report published Monday. “Approximately 6 out of 7 barrels available storage capacity at the Nymex hub are now full.”
The report highlighted an article from Reuters that discussed delays in crude deliveries from storage tanks at Cushing because there wasn’t enough room to drain existing tanks to blend oil to meet West Texas Intermediate crude CLH6, +1.38%specifications.
Cushing serves as a blending station, where crude oil from the midcontinent is mixed to the specific grades required by different refineries, according to StateImpact Oklahoma.
‘We soon might be in a situation that we have so much oil, that we don’t have enough of the right kind of oil.’
Stephen Schork, The Schork Report
“We soon might be in a situation that we have so much oil, that we don’t have enough of the right kind of oil,” Schork said.
But that’s not the only problem.
Richard Hastings, macro strategist at Seaport Global Securities, said building more tanks would take time and there would be questions over how the cost of tanks would be shared across the supply chain.
Meanwhile, the market is dealing with a “constant high volume” of crude oil coming from the floating storage at the Gulf Coast, the Canadian crudes coming by rail to the U.S. and domestic production, said Hastings.
“If the volumes get too high, then the intermediate delivery steps—moving large volumes from tanks to pipelines—could be difficult if the local hub’s pipeline capacity is constrained,” he said.
Hastings doesn’t expect Cushing to ever reach its working storage capacity because crude oil would back up in the rest of the Midwest, especially the Gulf Coast, instead.
“It’s the pipeline connections from Cushing to the Gulf Coast refiners that make the Cushing-Gulf Coast dynamics pretty obvious now,” he said. “Cushing capacity problems will push Gulf Coast volumes higher, which in turn create pricing problem for major global benchmarks.”
Ironically, in a MarketWatch story published nearly a year ago, analysts forecast that with the U.S. running out of space to store its glut of crude-oil supplies, prices for the commodity could sink to as low as $30 a barrel.
Read:Storage dearth may drive oil prices to $30
On Monday, WTI oil futures settled at $29.69 a barrel
A $600 million triple-levered fund bet on falling prices wreaked havoc through the entire crude complex.
----
The Real Reason For Oil's Crazy Volatility This Week
Submitted by Tyler Durden on 02/04/2016 12:57 -0500
As Reuters reports, the sudden liquidation of a $600 million triple-levered fund bet on falling prices wreaked havoc through the entire crude complex.
http://www.zerohedge.com/news/2016-02-04/real-reason-oils-crazy-volatility-week
The Real Reason For Oil's Crazy Volatility This Week
Submitted by Tyler Durden on 02/04/2016 12:57 -0500
As Reuters reports, the sudden liquidation of a $600 million triple-levered fund bet on falling prices wreaked havoc through the entire crude complex.
http://www.zerohedge.com/news/2016-02-04/real-reason-oils-crazy-volatility-week
Buy Oil On The Rumor And Rush To Sell On The Fact | Kitco News
Thursday January 28, 2016 17:53
After rising dramatically early in the day, crude oil prices are about 4.40% higher in late afternoon trading. Allegedly the Russian energy minister said that Saudi Arabia had proposed that oil-producing countries trim output, which would be the first reasonable move to help clear a glut that has depressed prices for about eighteen months.
Prices pared gains amid growing doubts over the premature release of the news of the possible deal to cut production by 5.00%. It seems that news reports asserted that delegates from the Organization of the Petroleum Exporting Countries had not yet heard of any plans for talks and that Saudi Arabia had not proposed cuts.
Russia may be trying to talk prices back up. The tired old bear is starved for cash, after all.
Crude had jumped as much as 8.00% after Russian Energy Minister Alexander Novak spoke of the proposed reductions in output, which would amount to about 500,000 barrels a day of cuts by Russia, one of the largest producers outside OPEC.
An unnamed Saudi official shortly thereafter told the Wall Street Journal the proposal did not in fact come from Saudi Arabia, but Riyadh and its Persian Gulf allies "are ready to cooperate with others" to bring stability to international oil markets.
There are a couple of major stumbling blocks to such a deal.
There are two odd-and-getting-odder bedfellows who have a lot to say about output, stockpiles and pricing, namely the United States and a rejuvenated Iran. (The new Iran of the no-sanctions with its 700K barrels of crude per day is itching to roll it all out as soon as possible.)
Because it often seems unbelievable, we need to remind ourselves that the U.S. has to be reckoned with because it is the world’s largest oil producer with enormous reserves waiting in the ground.
245's are back!
Oil was at 34.50 when DWTI hit 225 this morning.
I am ready to buy more at 225.
Bid is still 0.00.
$61.39 plus commission.
Bid is still 0.00.
50,754,309. It's a start.
Everything is looking great for the upside!
Bid is still 0.00.
I agree. You can call anytime and the CEO will speak to you personally. I have never had trouble getting through.
Bid is still 0.00.
I sold some $4.99 shares for $5.61 today.
Nearly 1.7 million shares were dumped in after hour trades by UBS, Morgan, Merrill Lynch and CitiGroup...
I estimate over $100,000,000 after hours. So far the same thing in GUY, Detour, LYD, Continental, B2B, the list goes on. I'm thinking crossovers to keep the shares in a particular groups hands, but taking advantage of tax losses. "I'll sell you these shares, sell them back in the new year"
Today's Volume was 1,471,162.
Average Volume 100D is 484,695.
I added more at 4.91 yesterday late afternoon.
IIROC Trading Halt - PVG
TORONTO, Dec. 11, 2014 /CNW/ - The following issues have been halted by IIROC:
Company: Pretium Resources Inc.
TSX Symbol: PVG (all issues)
Reason: Dissemination
Halt Time (ET): 16:43
IIROC can make a decision to impose a temporary suspension (halt) of trading in a security of a publicly-listed company. Trading halts are implemented to ensure a fair and orderly market. IIROC is the national self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada.
SOURCE Investment Industry Regulatory Organization of Canada (IIROC) - Halts/Resumptions
RELATED LINKS
http://www.iiroc.ca/
http://www.prnewswire.com/news-releases/iiroc-trading-halt---pvg-285539841.html
China’s top gold producer backs BC’s best gold project in a big way
POSTED ON December 08, 2014
http://ceo.ca/2014/12/08/chinas-top-gold-producer-backs-bcs-best-gold-project-in-a-big-way/
Zijin Mining Group C$81 Million Strategic Investment in Pretivm
12/08/2014
Press Release Details
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Dec. 8, 2014) - Pretium Resources Inc. (TSX:PVG)(NYSE:PVG) ("Pretivm" or the "Company") is pleased to announce that Zijin Mining Group Co., Ltd. ("Zijin") has agreed to make a strategic investment in the Company which will result in Zijin owning approximately 9.9% of Pretivm's issued and outstanding shares. Pretivm has agreed to issue to Zijin by way of a private placement 12,836,826 common shares of the Company (the "Purchased Shares") at a price per share of C$6.30 for gross proceeds of approximately C$80,872,004 (the "Offering"). Zijin is a Shanghai and Hong Kong listed company with extensive interests across a broad range of commodities, and is the largest gold producer in China.
The Offering constitutes a significant portion of the planned equity component of the financing required to bring the Brucejack Project into production. Pretivm intends to use the proceeds from the Offering to fund capital expenditures including the procurement of long-lead items and camp infrastructure. The permitting process for a 2,700 tonne-per-day underground mine at Brucejack is currently underway.
"Zijin's investment positions us well at a critical stage in our advance to production," said Pretivm's CEO Robert Quartermain. "Zijin is a well-capitalized shareholder, and as fellow shareholders, we value their long-term outlook and commitment to gold and to the successful development of our Brucejack Project as a high-grade gold mine."
http://www.pretivm.com/news/news-details/2014/Zijin-Mining-Group-C81-Million-Strategic-Investment-in-Pretivm/default.aspx
Bid is still 0.00.
Bid is still 0.00.
Bid is still 0.00.
Pretium Resources: Huge Upside Even At The Current Gold Price
Nov. 11, 2014 1:16 PM ET | About: Pretium Resources Inc (PVG)
Summary
Conservative calculations show more than 100% upside potential for shares of Pretium.
Pretium should have no problem in financing the Brucejack mine and starting construction in 2015.
Another deposit (Snowfield) has measured and indicated resources worth $45 billion.
http://seekingalpha.com/article/2670375-pretium-resources-huge-upside-even-at-the-current-gold-price?source=marketwatch
Bid is still 0.00.
Bid is still 0.00.
This could be the BIG day!
Pretium's Canadian Golden Elephant
Nov. 3, 2014 10:53 AM ET | About: Pretium Resources Inc (PVG)
Summary
British Columbia's Golden Triangle is host to some of the world's largest gold deposits.
Pretium Resources' Brucejack project holds a uniquely spectacular high-grade gold deposit.
The economics of mining Brucejack's Valley of the Kings zone are wildly positive.
http://seekingalpha.com/article/2631085-pretiums-canadian-golden-elephant?uprof=45
Gold is down 35.20 at 1163.60.
The breach through $1,202 set up the break and the triple bottom of $1,183 was easily taken out.
PVG touched 4.80 this morning. Is this the low they have been looking for? Hopefully PVG will go over 5.40 soon!
PVG touched 5.33 today before it turned and went back down to close at 5.01.