U.S. Crude Up 1.5 Million Per Day In 2019

Posted on by Robert Boslego

The Energy Information Administration reported that December crude oil production averaged 12.779 million barrels per day (mmbd), down 84,000 b/d from November. Reductions occurred in the Gulf of Mexico (47,000 b/d), North Dakota (40,000 b/d), Colorado (26,000 b/d) and Oklahoma (16,000 b/d) and were likely weather-related. Texas production rose by 32,000 b/d and reached a new high of 5.350 mmbd.

Phillips 66 Partner’s Gray Oak pipeline is expected to ship an additional 900,000 b/d in the Permian. It began shipments and is expected to be in full service by the end of the second quarter of 2020.

Crude

The gains from last December have amounted 816,000 b/d. And this number only includes crude oil. Other supplies (liquids) that are part of the petroleum supply add to that. For December, that additional gain is about 700,000 b/d. Continue reading "U.S. Crude Up 1.5 Million Per Day In 2019" →

Silver Has Three Options To Go

Posted on by Aibek Burabayev

Last week I showed you the chart where gold and silver were compared. The latter was in a worrisome lag behind the shining gold. I think most of us got tired to see if the white metal could update at least the top, that was hit last September amid gold striking one target after another reaching a 7-year maximum. Then I asked you to share your opinion as this alarming signal could be a double-edged sword. Below are your bets about it.

Silver

The majority picked the optimistic option of gold, leading the silver to the upside. The opposite came true last week as silver plummeted deep with a minus 14% off the week’s top dragging gold down; the latter lost almost an 8% off the weekly maximum. But before that, gold managed to reach target #4 at the start of last week!

What’s next for silver? Continue reading "Silver Has Three Options To Go" →

Is the Coronavirus a Black Swan Event that Will Cause the Next Recession?

Posted on by Matt Thalman

The deadly Coronavirus has now spread to more than 60 countries around the world and infected more than 85,000 people, killing nearly 3,000. The virus began in China, which is where overwhelmingly most of the infections and deaths have occurred, but several other countries have recently seen dramatic spikes in infections.

The virus, which was initially diagnosed in December 2019, has proven difficult to contain. However, based on reports from China, the spread of the virus can be slowed, only after what some would consider ‘extreme’ measures. Those measures in China where quarantine orders of the general public, school closures, and businesses shutting down daily operations. These steps have appeared to help the spread of the virus in China, but have taken their toll on the world economies.

During the last week of February, the Dow Jones Industrial Average fell 3,500 points or more than 12%. That is the largest one-week point loss ever for the index, while the percentage decline is the biggest we have experienced since the 2008 financial crisis.

So why did the US markets react the way it did? Continue reading "Is the Coronavirus a Black Swan Event that Will Cause the Next Recession?" →

Transformation Underway - CVS Health and Aetna Combination

Posted on by Noah Kiedrowski

The combination of CVS Health (CVS) and Aetna is proving to be a success after initial skepticism by investors. CVS has broken out recently due to a string of better than expected quarters, in part attributable to the Aetna acquisition. CVS is generating large amounts of free cash flow, paying down debt, and returning value to shareholders in a variety of ways. To further boost long-term growth prospects, restore growth, and fend off potential competition, CVS combined with Aetna. This combination creates the first through-in-through healthcare company, combining CVS's pharmacies and PBM platform with Aetna's insurance business. The new CVS combines its existing pharmacy benefits manager (PBM) and retail pharmacies with the second-largest diversified healthcare company.

This is a bold and hefty price tag to pay yet necessary to compete in the increasingly competitive healthcare space, changing marketplace conditions, and political backdrop with drug pricing pressures. CVS made a defensive yet acquisition required to enable the company to go back on the offensive. CVS had been beaten down for years, plummeting by over 50% ($113 to $52) from its multi-year highs. As of late, CVS has broken out to the mid $70s on the heels of its positive string of earnings. At current levels, CVS presents a compelling investment opportunity while the company is still in the early stages of its CVS-Aetna combination, which drives shareholder returns.

Challenging Backdrop

The pharmaceutical supply chain cohort, specifically CVS, has been unable to obtain a firm footing in the backdrop of consolidation within the sector, negative legislative undertones, drug pricing pressures, rising insurance costs, and a market that has lost patience with these stocks. All of these factors culminated into sub-par growth with a level of uncertainty as the sector continued to face headwinds from multiple directions. Many of the stocks that comprised this cohort presented compelling valuations in a very frothy market. This allure had been a value trap as these stocks continued to disappoint. It's no secret that these companies have been faced with several headwinds that have negatively impacted the growth and the changing marketplace conditions have plagued these stocks. Continue reading "Transformation Underway - CVS Health and Aetna Combination" →

Futures Market Is Not Immune To Coronavirus

Posted on by Mike Seery

Natural Gas Futures

Natural gas futures in the March contract settled last Friday in New York at 1.91 while currently trading at 1.71 lower for the 3rd consecutive session while hitting a 4 year low. Fundamentally speaking, according to Energy Weather Group, the U.S. winter through January is the 2nd warmest winter season in 70 years, which has reduced heating demand for natural gas coupled with elevated inventories.

All commodity sectors, including U.S. equities, are on the decline as nobody wants to own anything until the Coronavirus shows more clarity. The next major level of support is down at the 150 level. I see no reason to be a buyer at this time as the entire energy sector is experiencing bearish trends, and if you are short, stay short as gas prices are trading far below their 20 and 100-day moving average as the trend clearly is to the downside.

TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE

Silver Futures

Absolute panic has entered all commodity and stock sectors this week because the Coronavirus is spreading worldwide, sending huge volatility across-the-board. Silver prices hit a 5 month high on Monday as now prices are at a 2 month low after settling last Friday in New York at 18.61 an ounce while currently trading at 17.20 down about $1.40 for the week.

I have been recommending a bullish position from around the 18.13 level while getting stopped out around the 17.20 area as it is time to move on and wait for some sanity to come back into these markets. Continue reading "Futures Market Is Not Immune To Coronavirus" →