Tag: crude oil analysis

GE's Timely Baker-Hughes Deal: Rigs And Oil Production Set To Rise

Posted on by Robert Boslego

Robert Boslego - INO.com Contributor - Energies


General Electric Co. (NYSE:GE) announced a deal to combine its oil-and-gas business with Baker-Hughes, creating one of the world's largest providers of equipment, technology, and services to the oil and gas industry. Worldwide drilling activity had peaked in November 2014, the same month that Saudi Arabia had started the war for market share, which eventually caused oil prices to collapse.

As oil prices plummeted, so did the rig count. Active rigs worldwide fell from 3,670 to 1,405 in May 2016, a 62% drop. In the U.S., rigs fell from 1,930 t0 408, a 79% drop.

But as oil prices rebounded to $50/b in late May, the rout ended. Since May, active rigs rose by 25% in the U.S. and by 13% worldwide. Continue reading "GE's Timely Baker-Hughes Deal: Rigs And Oil Production Set To Rise" →

Myths About Oil And The Dollar

Posted on by Robert Boslego

Robert Boslego - INO.com Contributor - Energies


Oil prices and the dollar have been highly negatively correlated during the oil price collapse. From June 2014 through September 2016, the correlation has been -95%.

In financial articles, it's a commonplace to read that oil prices fell because the dollar strengthened, or oil prices rose because the dollar weakened. This is largely a confusion of correlation with causality.

It is true that there is a linkage. A stronger dollar does render oil prices higher in foreign currencies, thereby adversely affecting demand, a negative factor for oil prices. Continue reading "Myths About Oil And The Dollar" →

Copper Waits If Oil Keeps Upside; China Is In Focus

Posted on by Aibek Burabayev

Aibek Burabayev - INO.com Contributor - Metals


Chart 1. Crude Oil-Copper Correlation: Gap Widened

Crude Oil-Copper Correlation
Chart courtesy of tradingview.com

Another attempt by oil to close above the psychologically important $50 level (black dashed horizontal line) has failed. This was the third and a good try, and it was after a good correction in July, which makes bulls nervous as they lose their patience. Copper couldn’t keep the correlation gains achieved in July as it didn’t follow the rising crude last month and on the contrary, it moved the opposite way below the $2.2 level. The gap between them widened.

It’s not all bad news. There are at least two positive factors: Continue reading "Copper Waits If Oil Keeps Upside; China Is In Focus" →

Freeport-McMoRan Could Double Amid Strong Copper

Posted on by Aibek Burabayev

Aibek Burabayev - INO.com Contributor - Metals


Copper advanced 15 cents or 7% higher from my previous post and it looks like we are going to see much more strength as it was just a warming-up.

Chart 1. Copper-Oil Weekly: The Metal Tries To Catch Up Consolidating Crude

Chart 1. Copper-Oil Weekly: The Metal Tries To Catch Up Consolidating Crude
Chart courtesy of tradingview.com

The comparative chart above became a tradition. This time, there are no dramatic changes on it and the only drama here is the failure of crude oil to surpass the first strong barrier at the $50 mark (black dashed horizontal line). Oil has been stuck in a $5 range between $45 and $50 levels. We are at a crucial point as soon we will know for sure if it was a strong correction in oil before another huge drop to the $26 low or below or is it a consolidation before the break through $50 and then $60 barriers within a new uptrend. Continue reading "Freeport-McMoRan Could Double Amid Strong Copper" →

OPEC and Crude Futures Price Prospects

Posted on by Robert Boslego

Robert Boslego - INO.com Contributor - Energies


OPEC will hold its 169th Meeting in Vienna on June 2nd. Its tentative program calls for a press conference to be held at 1600 hours. Don’t expect the fireworks that followed its conference 18 months ago when Saudi oil minister al-Naimi declared a market share battle against North American shale producers. In fact, don’t expect much of anything.

A lot has happened since the last OPEC meeting in December. A strong El Niño resulted in record high temperatures in North America during the first half of the winter, undercutting prices. Poorer members, such as Venezuela and Nigeria, implored the group’s richer Gulf state producers to cut back to stop the hemorrhaging. Saudi Arabia refused to budge.

The sanctions against Iran were lifted in early January. Iran proclaimed it would restore lost production of 500,000 to one million barrels per day. Crude prices tumbled further and by mid-January had dropped to the mid-$20s. The market panic was in full-force. Continue reading "OPEC and Crude Futures Price Prospects" →