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I misread the data on inventories. Have no idea what I was thinking about, just made a stupid mistake.
Here's the latest on inventories:
http://www.reuters.com/article/2015/01/28/us-markets-oil-idUSKBN0L107120150128
RIG will benefit tremendously when the republicain Congress open the US Atlantic Coast for drilling, which will likley happen in 6 months.
Drill baby drill.
US Crude Inventories now at 8.874M barrels down from 10.071M barrels last week. If crude is going to $30, the US inventory is going the wrong way. Someone call Goldman and tell them to check inventory before they call for a crash in crude prices.
Another funny thing is that Bent is now selling for $49.39 barrel. WTI is a little soft at $45.36. Nothing new here. Just an average trading day with a slight up trend.
It seems that the crude traders are ignoring Goldman. I think I will to.
This is insane! An OPEC leader says oil has bottomed. The next day Goldman Sacks says oil may hit $30 barrel. There's no data to back up either statement. These predictions are coming from stock munipulators who make money on volitility. They trade by computer program designed to exploit human fear. They short the oil sector on the opening bell, scaring hell out all the weak shares. Then they quickly clear their short and buy up as many scared shares as they can and the price bounces back by the closing bell. We might even see an up day.
There should be a law that all price predictions by brokerage houses must be release at noon on Monday so traders can judge them all at the same time.
But don't worry... some jerk will come along tommorrow and say crude may hit $55 by end of January.
Thank God I had some dry powder... just picked up another 2K at $16.25 --- thanks Goldman.
Shorts need 7 days to cover.
http://stafforddaily.com/short-interest-of-transocean-ltd-increases-by-8-7/322929/" rel="nofollow" target="_blank" >http://stafforddaily.com/short-interest-of-transocean-ltd-increases-by-8-7/322929/
Dividend suspension sure to happen.
Lots of reasons to suspend and no reasons not to. RIG needs the cash to see through the slow times coming. Besids, a $3 dividend on a $16 stock is insane. Major share holders will vote to suspend, you can bet on it.
Another good video on crude:
Interesting video on oil prices
You're listening to media spin. No one knows what the new king will or will not do. He just appointed his sonas defense minister. He will likley appoint a new oil minister within 10 days.
RIGN up 3.5% on the Swiss exchange.
RIGN
Wanka, think things out.
By forcing crude down to $50, they lose more then $50 per barrel for the oil they produce and will continue to lose $50 per barrel. This makes them the BIG LOOSER in the long run. In other words, they are selling their oil for half price just to hang on to market share in a glutted market. When the price rises again, as it surely will, they be facing the same supply/demand problems all over again. The continue to hold current production levels does not make financial sense especially in view of the fact that technology has change the playing field, and will continue to do so. OPEC can't win this game in long run. They would be far better to give up 20% market share to get a stable price at around $75. This is what's gonna happen anyway.
In other words, the Saudis have started a price war that will hurt them tremendously in the end. The old bull-headed oil minister made a huge mistake. He held his office because he had the support of the dying King. I don't think the new King's advisor will recommend holding on the old managment team who has now lead them into a major crisis.
I think the new king will move quickly to appoint a level headed politician to end the price war and get crude back up to at least $75 where it belongs.
For sure, there is just too much oil to support $100 per barrel. Maybe 10 years from now... but not now.
Change could come quickly. Incoming kings have traditionally chosen to appoint new ministers to head top ministries like oil and finance. If we get a new oil minister, we might get a reduction is crude production to stabilise the oil market.
Many people think OPEC should cut. A new oil minister might do just that.
The Saudis have many problems and don't need to make any more enemies over oil policy.
Saudi King Abdullah dies, new ruler is Salman
Certain TRUTHS must be considered:
(1) The world produces ~92 million barrels of crude per day. Production in existing oil fields decline 5% per year (4.5 million barrels per day). At $50 crude, production will fall to ~85 million barrels per day at the start of 2016.
(2) Current oil demand is ~89 million barrels per day (3 million barrels less than current supply. $50 crude will stimulated world economy and increase demand to 92 millions barrels per day by 2016.
(3) The falling production at $50 crude and the increasing demand curves will cross by the middle of 2015 and will create a crude shortage by the start of 2016.
(4) Deep water oil fields produce crude for decades. The wells are expensive to drill but production decline over time is far less. In other words, there is more money to be made in deep water.
(5) RIG is the world's largest deep water driller. The company's stock got beat to hell in the GOM rig fire and oil spill and never really recovered even thought that have now been cleared from any further resposibility. This disaster in now behind them.
__________________________________
Conclusion #1: Regardless of curent prices, producers must continue to drill at the same pace as 2014 or production will fall far short of demand.
Conclusion #2: When major US oil producers announce budgets cuts for offshore drilling, they are saber rattling and trying to raise political support to repeal the ban of oil exports. They are also trying to gain political support for opening the East Coast of the US for offshore drilling. In other words, US oil jobs are falling and we need help with important issues. A republican congress is listening to every word. Drilling off the US eastern coastline is coming soon.
Conclusion #3: Crude oil will soon rocket up. Let's just hope it stays low enough to get the world economies hopping.
Conclusion 4: RIG will be selling above $35 by the close of 2015, maybe more.
EIA expects global oil inventories to continue to build in 2015, keeping downward pressure on oil prices. The forecast Brent crude oil price averages $58/bbl in 2015, $11/bbl lower than projected in last month's STEO. Based on current market balances, EIA expects downward price pressures to be concentrated in the first half of 2015 when global inventory builds are expected to be particularly strong. EIA projects that Brent prices will reach a 2015 monthly average low of $49/bbl in January and February, and then increase through the remainder of the year to average $67/bbl during the fourth quarter.
Sounds good to me....
RIG is trading with herd mentality. Fundamentals have nothing to do with the price. The stock is tracking the price of crude in Lock step (watch USO trade). This means that going long on RIG is betting that crude oil will recover. On the other hand, shorting RIG is the same as betting that crude will get much cheaper.
I bet crude will find a bottom about where it is now and slowly move up from here. I KNOW that crude will eventually work back to at least $65 barrel. And, because RIG is tracking crude (USO), it's safe to say that the share price will rise to at least $35.
It doesn't matter to me if oil falls to $20 and RIG drops to $8, I know neither of these prices can remain low more than a few months. All that matters to me is that I hold my shares and wait until oil recovers and so will RIG.
I even like the idea that RIG shares are selling cheap because many investors that got in at a higher price will get disgusted and dump out. New share holders will take their place. The new bunch will profit and want to hold RIG for longer periods. This means fewer share will be available on the upswing, which means that the price will rise faster.
Anyway, I happy with my RIG position and fully intend to hold no matter how low it gets.
I know I got a winner here so no need to panic!
Happy Trading....
One of the smartest things you could have done over the past seven years was to invest in the 10 stocks that Wall Street analysts liked least, on the first trading day of the new year.
Since Jan. 2, 2008, that strategy would have turned $100 into about $270, compared with about $170 for someone who just bought and held the S&P 500 Index DO, +0.76% excluding trading costs and taxes.
There is research implying that this strategy has worked for far longer than the past seven years — it may indeed have worked for many decades — but I’ve only been tracking the data since 2008.
This is more than happenstance. The stocks that everyone hates are often underpriced in relation to their fundamentals. Their stock prices are artificially depressed by the institutional and psychological biases of Wall Street, which lead too many investors to think and act as a herd.
Last year, the 10 stocks in the S&P 500 rated the least popular among analysts — in other words, those with the fewest “buy” and the most “sell” recommendations — at the start of the year, turned in an average return of 19%, compared with only 14% for the S&P 500.
The obvious follow-up question is: What are the most hated stocks for 2015?
RIG is #2
Hang in tight.
MARKET MUNIPULATION BY THE NEWS MEDIA?
The Wall Street Journal announced that "Oil prices started the week deep in negative territory on expectations that a sustained recovery is still a long way off."
http://www.wsj.com/articles/oil-prices-slightly-lower-but-likely-to-remain-volatile-1421646787
Brent now at $49 while WTI slight off $48. This is a far cry for "deep in negative territory."
I see a lot of this scare publicity, which appears to be designed the drive oil prices even lower. I don't understand? Who could be behind this and why?
Any ideas?
SHORT SQUEEZE ALERT:
Sentiment can change on a dime. When investors sense that crude has bottomed, they will load up on beaten down offshore drillers faster than a jack rabbit darts around a patch of cacti.
Short interest in RIG stands at 101 million shares. http://shortsqueeze.com/?symbol=RIG&submit=Short+Quote
It will take ~6 days for shorts to reverse. RIG could bounce up $10, maybe more. Enjoy the ride!
The squeeze will come rather quickly. We might see the shorts starting to reverse themselves any day now. I expect to see many ~7% to 8% gaining days in the coming month. This could start a stampede so don't be in a rush to grab a quick $5 profit. Let the squeeze play out at least until total volume increase surpasses 50 million shares over normal volume. Said differently, wait until Daily volume exceeds ~30 million shares for ~3 days.
Have fun!
2015 Predictions: WTI $54.58 - Brent $57.58
2016 Predictions: WTI $71.00 - Brent $75.00
These prictions come from the US ENERGY INFORMATION ADMINISTRATION EIA webpage
If these predictions hold true, RIG will sell in the $30 range at the end of 2015, and in the $40 range at the end of 2015. Said differently, longs have a good chance to double their money in 2 years. Furthermore, the dividend that will surely by eliminated in a few months, will likley be reinstated at the start of 2016. Not only will we double our investments, but will be earning ~7% interest. The only thing to worry about then is paying more income taxes.
F Saudis agreed! Why don't we just band crude IMPORTS from the Saudis and start exporting North American crude. The rest of OPEC will be forced to agree or will band their exports too. Let Saudi sell to China.
Would the Saudis munipulate the price of crude? Of course they would. They got the inside line on crude prices. They would pull any trick they could and have likely been doing so for decades.
Now that they've had their fun, its time for a bit on sanity.
No way are the Saudis going to give away their oil at cheap prices for much longer. Besides PEAK oil will surely come in a decade or so and crude will likely hit $200 or more. Let's just hope the world has cheap alternatives by then.
For now, $50 brent would be perfect for the world economy, and for RIG... but not the Saudis. They'll cut production even if they have to do it secretly. I'm just hoping prices don't get much higher than about $65 barrel in 2015 so that Europe, Japan, and India have a chance to recover.
Anyway, I really don't see any downside to RIG in 2015. I been following this company since 1995. It's a marvelous daytrade stock but I'm buy and hold now because I don't have enough money to daytrade and still hold my current margin position. I sold some property and will be doubling my RIG investment by the end of next week. Then maybe I go back to daytrading this puppy.
RIG is a great investment at this point. The only thing holding the ratings down is the bloody dividend. RIG needs to cancel it and then I see the stock drifting up like a hot-air balloon on a cold day.
Both WTI and RIG prices can recover quickly. In early 2009, WTI was $32 barrel; RIG was $54. Late in 2010, WTI at $90; RIG at $69. RIG hit $84 in Feb 2011.
In late Nov. 2014, less than 2 months ago, RIG was $25. It will be back over $25 by 17 March 2015.
I'm surprised price not holding above $16, but not to worry... we will hit $20 by the end of January. Lots of buyers waiting on the side to make sure crude has bottomed.
I posted early that brent at $50 is the sweet price for 2015. If adjusted for inflation, $50 brent is about average price for the last 40 years. $50 brent cuts marginal production and helps the Saudis maintain market share. $50 brent helps Europe recover and increases oil demand. In fact, $50 brent will boost world economies and help Japan, China, and India recover. This will increase worldwide crude demand by 10% and raise brent prices to $60 to $70 by Dec 2015.
At $50 brent, RIG will cut the dividend, and will prosper where other offshore drillers might not hold their heads above water. I see the share price doubling by the end of 2015 with another double by the end of 2016.
You're not thinking straight. Why would major stake holders want to bankrupt RIG? Suspending the dividend ensures that RIG can make it through the downturn and emerge in better condition than any other offshore driller. The number of offshore rigs need to drop 20% or more. Lots of negatives must be overcome. RIG can't do this saddled with the high cost of maintaining the dividend.
Most investors who bought in because of the dividend have all ready bailed out. They'd be fools to hang on during these trouble times. Naturally, if RIG maintains the dividend, they will buy back in and the price will spike. On the other hand, those that are still in now are not fearful of a dividend cut because they think such a move will boost share prices.
Yesterday, RIG traded 5 million shares in the first hour. The sellers were in a panic. The buying was likely short covering. This type of trading needs to get done before we see a run up, which will surely come.
Crude bounced up and down due to options expiring. Nothing to worry about. These are all moves needed before we start climbing back.
LONDON—Oil prices surged Thursday as the Organization of the Petroleum Exporting Countries said it saw slightly stronger global demand for crude this year as well as slower supply growth.
http://www.wsj.com/articles/oil-resumes-slides-as-sustained-recovery-looks-doubtful-1421302105
Brent hits $52 -- WTI passes $51 -- short squeeze coming.
Considering the beating this stock has suffered, any one is RIG just because of the dividend is a pure fool. Every wise investors knows the dividend is on the chopping block. Most of them would gladly give up the dividend just to get the stock back up $4 to $5 which is what will happen when RIG annouce the suspension of the dividend. In fact, if I though RIG was gonna pay $3.00 dividend for the rest of the year, I'd sell out now!
Get you're head on straight before you lose all your money.
BRENT $51.90... up $2.94 -- WTI 50.27...up $1.80
Brent passes $51.00
RIG up $0.80 in Swiss Exchange
http://www.six-swiss-exchange.com/shares/security_info_en.html?id=CH0048265513CHF1
Brent passes $50... shorts heading for a huge squeeze. Better buy on the open, otherwise you butt will be toasted.
WTI hits $50... can you spell short squezze?
I don't kid around.
There will be no drop in share price when a final decision on the dividend is announced. In fact, the stock will bounce up $3 to $4 and may catch a bunch of stupid shorts with their pants down.
Div suspension will boost share price, not lower it. Most investors expect the cut and think its a good idea in today's market.
If you want in, the best time to buy is before the news is announced. Look at this way, if they suspend or cut the dividend, they will not surpirse anyone and few will exit the stock that haven't already done so. If the keep the dividend, the stock will still bounce up. There's little chance for a downward move either way. If there is a dip immediately after the news is announced; it will come from market muniulators trying to scare out the weak players and buy up their stock.
Besides, RIG is on credit-watch for a downgrade depending on whether they cut the dividend or come up with a better planto pay down debt. If they keep the dividend, and have no solid plan, their credit will be cut from investment grade to junk.
The dividend must be cut; the question is how much? I say RIG dividend drops to $1.00, yielding ~6.5% at current prices. This will come with managment's pledge to raise it back to $3 in 2017.
I also think managment is waiting to see if crude recovers before they give any hints of the dividend.
Anyone agree or disagree?
OIL BOUNCES ON EXPIRING OPTIONS
(Reuters) - World oil prices had their biggest surge in two-and-a-half years on Wednesday, rebounding from a nearly six-year low as traders turned away from the bearish pressures of a worldwide glut to cover themselves on expiring options.
http://www.reuters.com/article/2015/01/14/us-markets-oil-idUSKBN0KN07620150114
TRAQNSOCEAN TOP PICK OF THE ZEPHIRIN GROUP.
The Zephirin Group, Inc. is widely recognized as one of the World's Leading Independent Investment Research Companys. It's chairman is considered a leading expert in the Oil & Gas Sector.
He said: Transocean Ltd. (BUY) is our top pick because we expect the company to consistently continue to deliver strong free-cash-flow (FCF), much more so than its competitors (i.e., sell-rated Seadrill Ltd (SDRL) and sell-rated Diamond Offshore (DO).
The negative we see impacting the share performance of Transocean Ltd. is the potential downgrade by the debt rating agency Moody’s. From our view it would be an incredible slight for Moody’s to consider at this current level a downgrade of Transocean Ltd. debt now or through 2017.
Currently, Transocean Ltd. has approximately $1.1 billion of 4.95% Senior Notes due November 2015. In our normalized FCF analysis, we are estimating FCF of a negative $551.4 million – this is based on estimated cash-from-operation (CFO) of $2.7 billion (up from our 2014 estimates of $2.4 billion) minus cap-x spending of $1.5 billion, debt payment of $1.1 billion and new dividend of $572 million. This is before the usage of cash on hand of $2.9 billion. This also assumed that zero new debt is raised in 2015. The backlog that is due in 2015 is approximately $5.8 billion and $13.4 billion thereafter – which in our opinion fully covered the company’s debt payment.
Source:
http://blogs.barrons.com/stockstowatchtoday/2015/01/08/time-to-buy-transocean/
PEAK OIL IN 2015!
Many believe we have an oil glut--and are decades away from peak oil. But an oil glut is exactly what we would expect near the very peak. After all, peak oil is the point in time when the world produces more oil than ever in history--and the most it ever will produce.
OilPrice.com is convinced we are at peak oil right now:
http://oilprice.com/Energy/Crude-Oil/What-Will-2015-Do-For-Peak-Oil.html
Some accuse Saudi Arabia of keeping the price low to compete with the world's burgeoning natural gas industry — an allegation the Kingdom and OPEC have categorically denied.
Read more: http://www.businessinsider.com/traders-scared-as-hell-of-venezuela-2014-11#ixzz3OehzuIxe
Venezuela has the world's largest proven oil reserves. Ninety-five percent of their government cost was financed buy oil. The country is about to enter hyperinflation. Long lines to buy basic goods are every where. Riots in the streets.
Iran is in similar situation. Other OPEC countries are also suffering.
The Saudis made two huge mistakes. The first was to allow oil to go above $100/barrel. The secend was not to cut its own production to stabilize oil prices. These tactics worked when the US was the major importer/user, but with US the #1 oil producers, the ball game has changed.
One or two of the following is about to happen:
(1) The Saudis will agree to cut productions to clear the oil glut and stablizes prices.
(2) The world economy will heat up and remove the oil glut and prices will ease back up over 3 years.
(3) Or, Venezuela, Iran, Irag, and several other suffering members will resign from OPEC and start making private deals with oil importers, especially China. They might even trade oil for food and other goods.
(4) The US will lift the ban of oil exports.
(5) A new OPEC will form without the Saudis.
(6) The ecobomy heats up, oil production and demand increases, prices stabilize at $50 barrel, and we return to happy days.
Crude producers are just giving away money in bluffing game. The question is: who's goona be the first to cave in and cut production?
Anyway, volume is high so it looks like we have the makings of a nice double bottom. Let's hope for a good bounce back later in the day.
What ever happens, I'm in for the long pull.