19 Mar

Will the Fall in US Oil Production Accelerate?

WRITTEN BY Rabindra Samanta

Oil rig count

Last week, the oil rig count fell by one to 833—the lowest level since May. The rig count tends to follow US crude oil prices with a three to six-month lag.

Will the Fall in US Oil Production Accelerate?

In February 2016, US crude oil prices fell to the lowest closing level in 12 years. Between February 11, 2016, and March 18, 2019, US crude oil active futures rose 125.4%. The oil rig count reached a 6.5-year low of 316 in May 2016. Between May 27, 2016, and March 15, 2019, the oil rig count rose ~163.6%. Between May 27, 2016, and March 8, 2018, US crude oil production rose ~37.4%.

US crude oil production

On October 3, US crude oil active futures settled at $76.41 per barrel—the highest closing level since November 21, 2014. Based on the pattern we saw above, the oil rig count could keep rising until at least March. By the second quarter, the US crude oil production growth rate might reverse more. In the week ending November 16, the oil rig count was at 888—the highest level since March 2015. In the week ending March 8, the US crude oil production was 12 MMbpd (million barrels per day). The oil production fell by just 0.1 MMbpd. However, the production fell for the first time since the week ending December 7. With the fall in the oil rig count, the fall in US crude oil production might accelerate.

US crude oil output and oilfield services stocks

Since the US oil rig count hit a multiyear high on November 16, the VanEck Vectors Oil Services ETF (OIH) has fallen 9.2%. Schlumberger (SLB), Halliburton (HAL), Transocean (RIG), and Baker Hughes, a GE company (BHGE), have returned -10.1%, -11.1%, -2.5%, and 20.6%, respectively. OIH has 44% exposure to these stocks. Any slowdown in US oil drilling activities could be a concern for these stocks.

Any slowdown in US oil production might also impact broader market indexes like the S&P 500 Index (SPY) and the Dow Jones Industrial Average Index (DIA).

Latest articles

Broadcom (AVGO) stock fell ~8.5% after markets closed yesterday following the semiconductor giant's fiscal 2019 second-quarter earnings release. It missed analysts' revenue estimate and cut its fiscal 2019 revenue guidance by $2 billion to $22.5 billion due to sluggishness in its semiconductor solutions business.

The SPDR Gold Shares ETF (GLD), which tracks physical gold prices, has underperformed the broader markets year-to-date, rising just 4.4% compared to the S&P 500’s (SPY) gain of 15.9% as of June 14. The sentiment for gold, however, has been turning around.

Safe havens such as Treasuries and gold were back in favor on June 14 as stocks fell due to rising tensions in the Middle East, concerns over growth, and the looming threat of the US-China trade war. The tech-heavy Nasdaq Composite Index fell 0.67% in the first hour of trading.

Lululemon (LULU) stock rose 2.1% on June 13 in reaction to better-than-expected first-quarter results and an upgraded outlook for fiscal 2019 overall. The company's first-quarter adjusted EPS grew 34.5% to $0.74 on revenue growth of 20.4% to $782.32 million. Analysts had expected EPS of $0.70 and revenue of $755.31 million. Here's why the outlook got an upgrade.

14 Jun

IEA Again Slashes Its Oil Demand Growth Estimate

WRITTEN BY Rabindra Samanta

As of 4:40 AM Eastern Time today, US crude oil active futures were at $51.83, ~4% below their closing level in the previous week. If US crude oil prices stay at those levels today, they'll mark their third week of decline in five weeks.

14 Jun

Why Kimberly-Clark Stock May Stop Rising

WRITTEN BY Amit Singh

Kimberly-Clark (KMB) stock has risen 20.5% this year, boosted by the company’s better-than-expected sales and earnings during its last reported quarter. However, its stock could stop climbing. Here's why.

172.31.38.64