Oil Prices Slump to 10-Month Low as US Domestic Production Rises, Traders Digest Saudi Royal Reshuffle

Oil Prices Slump to 10-Month Low as US Domestic Production Rises, Traders Digest Saudi Royal Reshuffle

2:09 PM, Jun 21, 2017 — Oil futures prices were trading at levels last seen almost a year ago in recent trade after US government data showed an increase in domestic production of petroleum last week although overall US stockpiles of crude oil were lower for the second week in a row.

West Texas Intermediate (WTI) crude oil, the main US benchmark, was trading 2.9% lower at $42.27 per barrel recently, while Brent crude, the international gauge, was 3.1% lower at $44.59 per barrel. The last time Brent crude traded lower than this was in August 2016 while WTI crude last traded lower than its present level in July last year.

US domestic production of petroleum rose by 20,000 barrels per day to 9.35 million barrels per day in the week ended June 16, according to the Energy Information Administration’s (EIA) weekly oil report, published on Wednesday. The EIA’s data also showed that US inventories of crude oil declined by 2.5 million barrels to 509.1 million barrels last week. The drop surpassed the 1.7 million barrel weekly decline registered the previous week but was a lesser drop than the 2.7 million barrel drop which had been projected by the American Petroleum Institute (API) on Tuesday.

Total motor gasoline inventories fell by 0.6 million barrels, having increased by 2.1 million barrels a week earlier. Distillate fuel inventories rose by 1.1 million barrels having risen by 0.3 million barrels in the prior week, and propane/propylene inventories increased by 1.8 million barrels, having expanded by 2.4 million barrels a week earlier. Commercial petroleum inventories decreased by 1.9 million barrels, compared to a jump of 6.8 million barrels a week earlier.

Also feeding into trading sentiment was news of a change in positions for two of Saudi Arabia’s most senior officials. Home to one of the world’s largest reserves of oil and a key member of the Organisation of Petroleum Exporting Countries (OPEC), any changes to key government roles in Saudia Arabia stand to have potential implications on oil policy and, by extension, the price of oil.

Multiple news agencies reported on Wednesday that Saudi Arabia’s King had opted to promote his son, Mohammed bin Salman, to the role of crown prince, replacing Mohammed bin Nayef, his cousin, who was also removed from his post as interior minister. The Financial Times newspaper credited Mohammed bin Salman as having been the “driving force” behind Saudi Arabia’s plan to overhaul its oil-dependent economy, including the planned partial privatization of Saudi Aramco.

OPEC members collectively generate around one third of the world’s oil supplies and last month the bloc agreed to extend a curb on oil output for another nine months in an effort to ease the global glut in supply which had eroded prices severely in 2016 and the latter half of 2015.

Price: 6.49 Price Change: -0.04 Percent Change: -0.61

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Stocks Mostly Weaken as Amazon's Whole Foods Buy Weighs on Retailers

Stocks Mostly Weaken as Amazon’s Whole Foods Buy Weighs on Retailers

12:46 PM, Jun 16, 2017 — Stocks in the US were mixed to lower on the last trading day of the week, as economic data weighed and consumer names retreated after Amazon.com’s (AMZN) move to purchase food retailer Whole Foods Market (WFM) sparked competition worries.

Consumer staples dropped 1.3% in the steepest decline on the Standard & Poor’s 500, with the food and staples retailing sub-group retreating 4.7%. Kroger (KR) plunged 11%, extending Thursday’s losses to hit the lowest in more than three years.

Supervalu (SVU) dropped 13% and Sprouts Farmers Market (SFM) fell about 5%. Whole Foods Market surged 27% and Amazon gained 2.9% after the $13.7 billion transaction was announced.

Economic releases also dampened sentiment. Housing starts declined 5.5% in May to a seasonally-adjusted annual rate of 1.092 million, missing expectations for an increase of 4.3%. April was revised downward to 1.156 million from 1.172 million. Permits were also lower in May, down 4.9% to a SAAR of 1.168 million, missing expectations for a modest gain of 1.6% to 1.249 million. Action Economics called the numbers “disastrous”.

In company news, Booz Allen Hamilton (BAH) plunged 19% after saying late Thursday that the US Department of Justice is conducting a civil and criminal investigation of its unit, Booz Allen Hamilton Inc, relating to certain elements of cost accounting and indirect cost charging practices with the government.

Lithia Motors (LAD) fell 8.2% after it was downgraded at Bank of America Merrill Lynch to underperform from neutral. Gener8 Maritime (GNRT) jumped 9.5% after Dow Jones said the company is in early talks to be bought by Frontline (FRO).

In afternoon trading, the Nasdaq Composite fell 0.2%, the S&P 500 slipped 0.1% and the Dow Jones Industrial Average was up 0.1%.

Globally, the FTSE 100 and the Nikkei 225 each rose 0.6%, the Hang Seng added 0.2% and the Shanghai Composite slipped 0.3%.

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Sears Canada Shares Plunge to New Low Amid Doubts it Can Continue as Going Concern

10:43 AM, Jun 13, 2017 — Sears Canada (SRSC) shares fell to their lowest level ever after the company said there is “significant doubt” as to its ability to continue as a going concern.

SRSC was down 31% at $0.59 recently, trading in a new 52-week range between $0.40 and $3.41.

It said it continues to face a “very challenging environment” and would need to obtain additional sources of liquidity to implement its business plans. Current and forecasted cash flow will not be enough to meet obligations coming due over the next 12 months.

The company said it recently started a process to address the liquidity situation and to source and structure financial solutions and strategic alternatives to continue to finance its business and preserve and grow its franchise and brand reinvention. Such alternatives may include a financial restructuring or sale.

On Tuesday, Sears also reported a fiscal Q1 loss of $1.42 a share, compared to a net loss of $0.62 a share a year earlier, while revenue in the quarter ended April 29 was $505.0 million, down from $595.9 million a year earlier. Same-store sales rose 2.9%. Analysts’ consensus forecasts weren’t available for comparison.

Companies: Sears Canada Inc.
Price: 0.59 Price Change: -0.27 Percent Change: -31.86

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Stocks Head Higher as Investors Eye Former FBI Director’s Testimony

12:34 PM, Jun 8, 2017 — US markets strengthened on Thursday as investors kept a close eye on testimony by former FBI director James Comey, and other major events.

In the highly anticipated remarks to the US Senate Intelligence Committee, Comey, who was fired by Donald Trump, said he kept notes on conversations he had with the president because he thought the leader might lie. While markets initially fluctuated, they added to gains as Comey wasn’t seen as offering a so-called smoking gun that might hinder Trump and his policy plans.

Investors are also monitoring other key events, including a decision by the European Central bank to hold interest rates while raising growth forecasts and lowering the inflation outlook, and a general election in the UK.

Financials led gains on the Standard & Poor’s 500, rising 1.3% to pull the overall index slightly higher in the early afternoon. Utilities fell 1.4% in the steepest decline. On the Dow Jones Industrial Average, bank heavyweights topped the advancers, with JPMorgan Chase (JPM) rising 1.8% and Goldman Sachs (GS) increasing 1.5%.

Nvidia (NVDA) posted one of the best increases on Nasdaq, rising 5.6% after Citigroup reportedly said the shares could climb another 21% the next 12 months.

In company news, Vail Resorts (MTN) shed 3% after reporting fiscal third quarter earnings and revenue that missed Wall Street estimates, while lowering its full year net income guidance. Alibaba (BABA) surged 11% after CFO Maggie Wu said the company expects revenue growth between 45% and 49% in fiscal 2018, Reuters reported.

Urban Outfitters (URBN) slid 7.6% after the apparel retailer said its comparable retail segments net sales for the current fiscal second quarter are high single-digit negative. Nordstrom (JWN) rallied 11% after saying it’s exploring a going-private transaction with members of the Nordstrom family.

Economic data showed initial jobless claims were lower by 10,000 in the week to June 3 at 245,000, but that was higher than the 241,000 expected.

In afternoon trading, the Dow rose 0.3% while the Nasdaq and S&P 500 were both up about 0.2%.

Globally, the FTSE 100 and the Nikkei 225 both fell 0.4%, while the Shanghai Composite and the Hang Seng added 0.3%.

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United Arab Emirates Says Qatar Has Undermined Regional Security

7:24 AM, Jun 5, 2017 — The United Arab Emirates said Monday that Qatar has “undermined regional security and stability and failed to honor international agreements” and as a result the UAE has decided to sever all relations and gives Qatari diplomats 48 hours to leave the country.

“Qatari nationals may not enter into the UAE and Qatari residents and visitors are given 14 days to leave the country,” the UAE said. “UAE nationals are also banned from traveling or staying in Qatar. Closure of airspace and seaports for all Qataris in 24 hours.”

UAE imports 2 billions of cubic feet of gas per day of gas from Qatar via the Dolphin pipeline, operated by Dolphin Energy, in which Occidental (OXY) has a 24.5% equity stake. The Qatar index has plummeted since opening by as much as 8% at one point.

Companies: Occidental Petroleum Corporation
Price: 61.00 Price Change: +0.30 Percent Change: +0.49

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Oil Prices Advance After Eighth Consecutive Week of Declines in US Stockpiles

Oil Prices Advance After Eighth Consecutive Week of Declines in US Stockpiles

11:57 AM, Jun 1, 2017 — Oil futures prices were trading higher around midday on Thursday after government data showed an eighth consecutive week of declines in US inventories of the hydrocarbon commodity as well as a slump in its commercial petroleum stockpiles.

West Texas Intermediate (WTI) crude oil, the main US benchmark, was trading 1.0% higher at $48.78 per barrel recently, while Brent crude, the international gauge, was 0.6% higher at $51 per barrel. Earlier in the day WTI and Brent crude had been ricocheting between gains and declines.

US inventories of crude oil declined by 6.4 million barrels to 509.9 million barrels in the week ended May 26, according to the Energy Information Administration’s (EIA) weekly oil report, published on Thursday. This compared to a 4.4 million barrel weekly decline registered the previous week and an 8.7 million barrel drop which had been projected by the American Petroleum Institute (API) on Wednesday.

Total motor gasoline inventories fell by 2.9 million barrels, having decreased by 0.8 million barrels a week earlier. Distillate fuel inventories rose by 0.4 million barrels having fallen by 0.5 million barrels in the prior week, and propane/propylene inventories increased by 1.3 million barrels, having expanded by 1.5 million barrels a week earlier. Commercial petroleum inventories decreased by 5.2 million barrels, compared to a drop of 3.5 million barrels a week earlier.

Also feeding into trading sentiment was a slightly higher greenback and the decision by OPEC last week to extend a curb on oil output. The Dollar Index, which tracks the value of the US currency against a basket of foreign currencies, was 0.14% higher at the time of writing. As a dollar denominated commodity, a more expensive buck tends to make oil less affordable to international buyers.

Members of OPEC, which collectively generate around one third of the world’s oil supplies, originally agreed on December 10, 2016 to lower oil output by approximately 1.8 million barrels per day, starting on January 1 for at least six months. This was part of an effort to lower the global glut in oil supply and facilitate a recovery in prices, which had been severely eroded by overproduction in the prior two years. Last week, OPEC members agreed to extend the curb until the end of the first quarter of 2018.

Price: 6.76 Price Change: -0.16 Percent Change: -2.31

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Stocks Edge Lower as Oil Prices Weigh on Energy Shares

Stocks Edge Lower as Oil Prices Weigh on Energy Shares

12:44 PM, May 30, 2017 — US markets were drifting south on Tuesday afternoon as energy shares led declines among the sectors on the Standard & Poor’s 500 as oil prices retreated.

Energy was down 1.1% to lead six of the 11 groups down, while financials followed with a 0.6% slip. On the Dow Jones Industrial Average, Goldman Sachs (GS) lost 1.6% in the steepest decline, and JPMorgan Chase (JPM) fell 1%.

Crude declined on concern that supply cuts won’t be enough to curb gluts of the commodity. West Texas Intermediate, the main US oil variety, retreated 1.1% to $49.26 a barrel while Brent, the international benchmark, fell 1.6% to $51.47. Also, Goldman Sachs reduced its investment rating on shares of small- and mid-cap explorers and producers, citing a greater coverage skew toward those with elevated financial leverage. Whiting Petroleum (WLL) lost 8.5% and California Resources (CRC) fell 4%.

Investors were also absorbing a heavy day of data releases, with personal income and consumer spending both rising 0.4% in April, in line with estimates. PCE price index posted a 0.2% gain for the month, also meeting estimates. The May consumer confidence index declined to 117.9 from 120.3, missing estimates for 119.

In company news, Micron Technology (MU) rose 3% after the Nikkei Asian Review said the company is planning to invest $2 billion at a Japanese plant to produce next-generation DRAM memory chips.

CardConnect (CCN) surged 10% after First Data (FDC) said late Monday it will buy the provider of payment processing solutions for about $750 million, including the assumption of debt. First Data edged up 0.8%.

In afternoon trading, the Dow was down 0.1% while the S&P 500 and the Nasdaq were both less than 0.1% lower.

Globally, the FTSE 100 fell 0.3%, the Nikkei 225 was little changed while the Shanghai and Hang Seng bourses were closed.

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Riyadh Forum: Trump Middle East Trip Starts With Deals Flurry In Saudi Arabia

4:11 AM, May 22, 2017 — U.S. firm Honeywell (HON) was among a slew of companies that signed deals with state-owned oil giant Saudi Aramco and other firms and entities in the Kingdom at the weekend worth tens of billions of dollars as Donald Trump made his first overseas foray as the U.S. president.

In a deal announced on Saturday, Saudi Aramco signed a memorandum of understanding with Honeywell as part of Aramco’s In-Kingdom Total Value Add (IKTVA) program for an estimated $3.6 billion.

The kingdom is looking to increase its domestic market by adding a complete value chain – including creating a manufacturing center.

Aramco plans to reach 70% localization in all spending while exporting 30% of the country’s energy sector products by 2021.

General Electric (GE) signed deals worth $15 billion for services and equipment, while Jacobs Engineering (JEC) will form a joint venture with Aramco to manage business projects in the kingdom, and McDermott International (MDR) will transfer some of its ship fabrication facilities from Dubai to a new shipbuilding complex planned by Aramco in a deal estimated at $2.8 billion.

Dow Chemical (DOW) signed an agreement to build a manufacturing facility to produce polymers for coatings and water treatment applications. It also agreed to a feasibility study on proposed investment in performance silicones. Petrochemicals are a key growth area for Gulf oil producers like Saudi Arabia to increase high-end value products to meet demand from Asia.

Weatherford (WFT) signed an agreement for potential projects worth $2 billion to localize oilfield goods and services.

An extension was signed for Weatherford’s joint venture with Nabors (NBR) to see additional well services and studies into rig movements involving an investment of $9 billion over 10 years as well, a $7 billion investment over 10 years with Rowan Companies (RDC) to own and operate offshore drilling rigs.

On the defense side, Saudi Arabia discussed building a domestic arms industry instead of big ticket imports as has been the case in the past and Lockheed Martin (LMT) said to that end it would support the final assembly and completion of an estimated 150 S-70 Black Hawk utility helicopters in Saudi Arabia.

Lockheed Martin said Saudi Arabia expressed its intent to procure more than $28 billion worth of the company’s integrated air and missile defense, combat ship, tactical aircraft and rotary wing technologies and programs.

Meanwhile, Raytheon Company (RTN) said it and Saudi Arabia Military Industries Company signed a memorandum of understanding to cooperate on defense-related projects and technology development.

Meanwhile U.S. Secretary of State Rex Tillerson said on Saturday that deals worth $350 billion have been signed between U.S. companies and Saudi Arabia during the president’s first day in Riyadh.

He added brief comments on the Iranian presidential election by saying he newly-elected Iranian President Hassan Rouhani will use his second term in office to end Tehran’s ballistic missile program and end what he called its network of terrorism.

“I’m not going to comment on my expectation. But we hope that if Rouhani wanted to change Iran’s relationship with the rest of the world those are the things that he could do,” Tillerson said.

 

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Home Depot Profit Jumps in First Quarter, Full-Year Earnings Guidance Raised

12:15 PM, May 16, 2017 — Home Depot (HD), a US home improvement supplies retailer, raised its forecast for diluted earnings-per-share growth in the fiscal year on Tuesday as it posted double digit growth in its first-quarter earnings against a backdrop of brightening sentiment in the US housing market.

Net earnings for the quarter ended April 30 totaled $2.01 billion, or $1.67 per diluted share, compared with $1.80 billion, or $1.44 per diluted share, in the same period a year earlier, the Atlanta, Georgia-based company said in a statement on Tuesday. This beat the consensus estimate of analysts polled by Capital IQ for net earnings of $1.94 billion.

Revenue was worth $23.89 billion compared with $22.76 billion in the fiscal first quarter a year earlier, also topping the average analyst forecast of $23.74 billion in a Capital IQ poll. Gross profit was up by 4.7% at $8.15 billion over the same time frame.

The results “reflected broad-based growth across our interconnected platform and all geographies,” Craig Menear, chief executive of Home Depot, said.

The results come against a backdrop of improving sentiment in the US housing market. Sales of new single-family houses in March rose 5.8% from February to 621,000, the US Census Bureau and the Department of Housing and Urban Development said in a joint release last month. The February rate was revised to 587,000.

Another indicator, the US National Association of Homebuilders (NAHB) housing market index of homebuilder sentiment rose to 70 in May from 68 in April while the index of expectations for single family home sales for the next six months rose to 79 from 75, NAHB data published on Monday indicated.

The company, which operates 2,281 retail stores in across all US states and in Canada and Mexico said comparable store sales rose 5.5% and comparable sales in the US jumped by 6%. The company reiterated its sales growth estimates for this fiscal year at 4.6% and said it sees comparable sales also rising by about 4.6%.

Home Depot also raised its diluted earnings-per-share growth forecast for the fiscal year and now expects diluted earnings-per-share growth after anticipated share repurchases of about 11% percent to $7.15.

Price: 159.37 Price Change: +2.04 Percent Change: +1.30

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Apple Invests $200 Million in Glass Maker Corning From Advanced Manufacturing Fund

12:03 PM, May 12, 2017 — Apple (AAPL) said on Friday that it will invest $200 million into long-time supplier Corning (GLW), a specialty glass and ceramics manufacturer, from a new $1 billion fund it has set up to help support manufacturing in the US.

This is the first investment from Apple’s advanced manufacturing fund, created earlier this month, which aims to foster the development of new technologies and processes among US-based manufacturers and to create highly skilled jobs.

The investment will be made in Corning’s 65-year-old Harrodsburg, Kentucky facility, and will support Corning’s research and development as well as capital equipment needs and glass processing, Apple said. Apple and Corning have been working together since the latter supplied glass for the first iPhone 10 years ago.

Tim Cook, Apple’s chief executive, said earlier this month when unveiling the $1 billion fund that the impact of the investments would be far-reaching in creating US jobs.

“By doing that, we can be the ripple in the pond,” Cook told CNBC in an interview earlier this month. “Because if we can create many manufacturing jobs around, those manufacturing jobs create more jobs around them because you have a service industry that builds up around them.”

Apple now supports 2 million jobs across the US, including 450,000 jobs attributable to Apple’s spend and investment with US-based suppliers. Last year, the company said that it ordered goods worth $50 billion from more than 9,000 domestic suppliers and manufacturers.

The plan is also in line with one of the main campaign pledges put forward by US President Donald Trump, which was to bring back manufacturing jobs to the US from abroad.

Companies: Apple Inc.
Price: 155.62 Price Change: +1.67 Percent Change: +1.08

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