Friday, November 28, 2014

Must-See Oil Charts & News

The big story is that OPEC basically did nothing at its meeting.
“We will produce 30 million barrels a day for the next 6 months, and we will watch to see how the market behaves,” OPEC Secretary-General Abdalla El-Badri told reporters in Vienna.
And OPEC is doing nothing for a good reason. If OPEC cuts production, it actually helps the North American oil producers they are competing against.
"OPEC has relinquished the role of balancing the market. If they had cut production and prices had increased then they would, by definition, be losing market share. They would be encouraging and supporting further shale production. For them, short-term pain for long-term gain.”
The nail in the coffin had to be that Russia ruled out a deal on a production cut with OPEC. Nobody loses more from low oil prices than Russia.

This sent oil plunging, as you can see from this chart ...

In fact, oil is on its way to its biggest weekly drop in three years.

So who is vulnerable? This chart is from last year, and new technology is lowering the costs in the shale fields all the time. However, here are some likely suspects for pain ...

And here is a chart from Citigroup showing the average cost of US shale oil plays.

And if you follow THIS LINK you can see a (very busy) chart purporting to show the break-even cost of every drill project in the world.

How about individual companies?

Here is a list of 10 US shale oil stocks getting crushed the most on Friday's shortened trading day.

And who are the winners? Well, as subscribers to my $10 Trigger Alert know, I like airlines as a winner from lower oil prices. And sure enough, airline stocks are flying high on Friday.

Will OPEC's hard-line stance have the effect it wants? So far, estimates of US production aren't falling yet.
U.S. oil production has risen to 9.077 million barrels a day, the highest level in weekly data from the Energy Information Administration going back to 1983. Output will climb to 9.4 million next year, the most since 1972.
For investors already holding oil stocks, there’s no question that Friday will be a terrible day. But this is also a time for investors to begin considering the long-term opportunity once oil prices bottom.

Some other news of interest...

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