Connect with us

Business

Should You Buy The Oil Price Dip – OilPrice.com

Published

 on



Should You Buy The Oil Price Dip? | OilPrice.com


Alex Kimani

Alex Kimani

Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. 

More Info

Trending Discussions

Premium Content

  • Oil prices tumbled by nearly 10% on Tuesday, and have slide even further today.
  • The drop has been attributed to growing recession fears and weakening demand.
  • “While there are demand concerns given the gloomier macro outlook, the market is still expected to be tight for the remainder of the year,” says ING head of commodity strategy Warren Patterson. 

Oil Price Dip

Oil prices nosedived alongside the broader market on Tuesday, with U.S. crude dipping to the psychologically important level of $100/bbl as growing recession fears coupled with concerns over weakening demand outweigh a fundamentally tight supply market. WTI crude tumbled 8.2% to $99.50/bbl, the lowest since April 25 and the first close below the $100/bbl level in more than a month. At one point, WTI crumbled more than 10% to trade as low as $97.43. Meanwhile, front-month Brent crude fell by even more, losing 9.4% to $102.77/bbl, its lowest settlement since May 10.

“A growing number of analysts are expecting that many of the world’s leading economies will suffer negative growth in the next few months, and this will drag the U.S. into a recession,” Fawad Razaqzada, market analyst at City Index, has told Bloomberg.

“In the very near term, the Dow & S&P will have a major factor on crude direction as recession fears remain,BOK Financial‘s Dennis Kissler has told Bloomberg. He has also voiced concerns that fuel demand could “drop significantly now that the 4th of July holiday is behind us.

A brawny dollar has also not been helping oil and commodity prices as the leading currency continues to be the world’s preferred safe haven during these turbulent times.

Capital flooding into U.S. dollars, which has sent [the dollar] soaring… appears to be putting a headwind in front of commodity prices,” Colin Cieszynski, chief market strategist at SIA Wealth Management, has told MarketWatch.

Not surprisingly, energy stocks are getting hammered in the latest selloff, with Halliburton Company (NYSE: HAL) -8.1%, APA Corporation (NASDAQ: APA) -7.4%, ConocoPhillips (NYSE: COP) -6.9%, and Hess Corp. (NYSE: HES) -6.8% the biggest decliners.

Citi analysts have warned that crude prices could collapse to $65/bbl this year in the event of a recession. The experts say that oil prices could plunge even lower to $45 in another year as supplies hold up, but a global economic slowdown causes demand to decline. 

Luckily for the bulls, the bank has placed a mere 10% probability on this outcome.

Still, Citi clearly belongs to the bear camp and has assigned a 50% likelihood that Brent crude will drop to $85/bbl by the end of 2022.

Limited downside

Indeed, bullish sentiment in the oil markets remains strong despite the latest correction, with many analysts saying the downside for crude should remain capped by tight supplies.

While there are demand concerns given the gloomier macro outlook, the market is still expected to be tight for the remainder of the year. OPEC+ producers have limited room to increase output significantly, and so are unable to provide much relief to the market,” says ING head of commodity strategy Warren Patterson.

Related: China Continues To Buy Record Levels Of Russian Crude

Although the oil price rally appears to have stalled over the past month, thus capping further gains for the energy sector, a cross-section of Wall Street believes that oil prices still have plenty of upside. One such bull is J.P. Morgan Chase, who last week warned global oil prices could climb to a “stratospheric” $380/bbl if G7 nations succeed in imposing caps on the price of Russian oil and prompt Vladimir Putin to inflict retaliatory production cuts.

According to JPM, Russia’s robust fiscal position means the country can afford to slash crude output by as much as 5M bbl/day without excessively damaging its economy. However, such a drastic reduction would be bad news for oil consumers as it would push Brent crude prices to $380/bbl.

“The most obvious and likely risk with a price cap is that Russia might choose not to participate and instead retaliate by reducing exports,” “It is likely that the government could retaliate by cutting output as a way to inflict pain on the West. The tightness of the global oil market is on Russia’s side,“JPM  analysts wrote.

Smart investors appear to agree: three energy gurus led by Warren Buffett himself have chosen to follow the Oracle’s time-tested market wisdom of being fearful when others are greedy, and greedy when others are fearful. Over the last few weeks, Buffett, Jerry Jones and Harold Hamm–three of the richest and most successful businessmen in the U.S.– have doubled down on their oil and gas bets, using the selloff as a buying opportunity.

Between June 17 and June 22, Buffett bought 9 million shares of Occidental Petroleum (NYSE:OXY) for around $56 per share, which compares favorably with his previous purchase of OXY in the $50-58 range. In effect, Buffett now owns 25% of OXY, counting his warrants and total shares purchased. The Oracle of Omaha also owns a $20-billion stake in Chevron Corp. (NYSE:CVX). Warren Buffett is ranked the world’s 7th richest person with a net worth of $96.9B. Unfortunately, Buffet has seen his net worth shrink by $13.4B in the year-to-date, mainly due to the poor performance of his other U.S. stock investments thanks to a wide market selloff.

Several weeks ago, the Wall Street Journal featured Dallas Cowboys owner Jerry Jones in a story detailing how the billionaire grew his $1.1B investment in natural gas producer Comstock Resources Inc. (NYSE:CRK) into $2.7B. Interestingly, Jones bought control of Comstock Resources at the depths of the gas bust before natural gas prices made a dramatic U-turn. Jerry Jones is #182 on the Bloomberg Billionaires Index with a net worth of $10.7B, marking a nearly 15% increase.

Meanwhile, Harold Hamm, majority owner of shale exploration giant Continental Resources (NYSE:CLR), has gone on an all-out war to buy back the company’s minority stake. Earlier this month, Hamm offered to buy the remainder of the shale driller he and his family don’t already own for $4.3 billion, or $70/share, claiming that his company is grossly undervalued. The Hamm Family collectively owns 83% of the total outstanding shares of common stock.

By Alex Kimani for Oilprice.com

More Top Reads From Oilprice.com:

Download The Free Oilprice App Today


Back to homepage

<!–

Trending Discussions

–>



Related posts

Adblock test (Why?)



Source link

Continue Reading

Business

This Week's Top Story: Canada's Real Estate Bubble Eliminated By Data Revision & More Experts See Lower Prices – Better Dwelling – Better Dwelling

Published

 on


[unable to retrieve full-text content]

  1. This Week’s Top Story: Canada’s Real Estate Bubble Eliminated By Data Revision & More Experts See Lower Prices – Better Dwelling  Better Dwelling
  2. The Latest in Mortgage News: BoC’s Affordability Index reaches worst level since 1991 – Mortgage Rates & Mortgage Broker News in Canada  Canadian Mortgage Trends
  3. Housing Market Crash: How to Make a Profit  The Motley Fool Canada
  4. House Prices In Canada Are Set To Drop In 2023 & Here’s How It Will Compare To Pre-COVID Times  Narcity Canada
  5. Canadians are being crushed by the housing market. B.C.’s wannabe premier might be able to help  Canada’s National Observer
  6. View Full coverage on Google News



Source link

Continue Reading

Business

China's consumer and factory data miss expectations in July – CNBC

Published

 on


Employees working on an air-conditioner production line at a Midea factory in Guangzhou, China.
Jade Gao | AFP | Getty Images

BEIJING — China reported data for July that came in well below expectations as the real estate slump and Covid controls dragged down growth.

Retail sales grew by 2.7% in July from a year ago, the National Bureau of Statistics said Monday. That’s well below the 5% growth forecast by a Reuters poll, and down from growth of 3.1% in  June. Within retail sales, catering, furniture and construction-related categories saw declines.

Sales of autos, one of the largest categories by value, rose by 9.7%. The gold, silver and jewelry category saw sales rise the most, up by 22.1%. Online sales of physical goods rose by 10% year-on-year, faster than in June, according to CNBC calculations of official data.

Industrial production rose by 3.8%, also missing expectations for 4.6% growth and a drop from the prior month’s 3.9% increase.

Fixed asset investment for the first seven months of the year rose by 5.7% from a year ago, missing expectations for 6.2% growth.

Investment into real estate fell at a faster pace in July than June, while investment into manufacturing slowed its pace of growth. Investment into infrastructure rose at a slightly faster pace in July than in June. Fixed asset investment data is only released on a year-to-date basis.

“This year, the property market overall has shown a downward trend,” Fu Linghui, spokesperson of the National Bureau of Statistics, told reporters in Mandarin, according to a CNBC translation.

“Real estate investment has declined, and may have had some impact on related consumption,” he said.

Young people’s unemployment climbs

While the overall unemployment rate in cities ticked lower to 5.4% in July, that of young people remained persistently high.

The unemployment rate among China’s youth, ages 16 to 24, was 19.9%. That’s the highest on record, according to Wind data going back to 2018.

Fu attributed the high level of youth unemployment to Covid’s impact on businesses’ operations and their ability to hire.

In particular, he noted how the services sector, where young people typically account for a greater number of jobs, has recovered rather slowly. Fu also pointed to was young people’s current preference for jobs with more stability.

Stable jobs in China typically include those at state-owned enterprises rather than positions at start-ups or smaller companies.

“The national economy maintained the momentum of recovery,” the statistics bureau said in a statement. But it warned of rising “stagflation risks” globally and said “the foundation for the recovery of the domestic economy is yet to be consolidated.”

Analyst forecasts for July were projected to show a pickup in economic activity from June, as China put the worst of this year’s Covid-related lockdowns behind it, especially in the metropolis of Shanghai.

Exports remained robust last month, surging by 18% year-on-year in U.S. dollar terms despite growing concerns of falling global demand. Imports lagged, climbing by just 2.3% in July from a year earlier.

However, China’s massive real estate sector has come under renewed pressure this summer. Many homebuyers halted their mortgage payments to protest developer delays in constructing homes, which are typically sold ahead of completion in China.

The deterioration in confidence puts developers’ future sales — and an important source of cash flow — at risk.

Statistics spokesperson Fu described the construction delays as specific to some regions.

He said the real estate market is “in a stage of building a bottom” and its impact on the economy will “gradually improve.”

Fu said in response to a separate question that once Covid is under control, consumers’ pent up demand will be released.

The potential for a Covid outbreak has remained another drag on sentiment. A surge of infections in tourist destinations, especially the island province of Hainan, stranded tens of thousands of tourists this month.

The local situation reflects the large gap between goals set at the beginning of the year and the ensuing reality. Hainan had set a GDP target of 9%, but was only able to grow by 1.6% in the first six months.

Similarly, at a national level, China’s GDP grew by just 2.5% in the first half of the year, running well below the full-year target of around 5.5% set in March.

When asked about the target Monday, Fu did not discuss it specifically. But he pointed to a host of challenges for growth at home and abroad, including growing uncertainties overseas.

Looking ahead, Fu said China’s economy “still faces many risks and challenges” in sustaining its recovery and maintaining operations in a “reasonable range.”

China’s top leaders indicated at a meeting in late July the country might miss its GDP goal for the year. The meeting did not signal any forthcoming large-scale stimulus, while noting the importance of stabilizing prices.

The country’s consumer price index hit a two-year high in July as pork prices rebounded.

Ahead of Monday morning’s data release, the People’s Bank of China unexpectedly cut rates on two of its lending rates — both for the first time since January, according to Citi.

Adblock test (Why?)



Source link

Continue Reading

Business

Why the CRA might owe you money; Airlines continue to deny compensation claims: CBC's Marketplace cheat sheet – CBC News

Published

 on


Miss something this week? Don’t panic. CBC’s Marketplace has rounded up the consumer and health news you need.

Want this in your inbox? Get the Marketplace newsletter every Friday.

Nearly 9 million Canadians have $1.4B in uncashed CRA cheques — could you be one of them?

Good news from the Canada Revenue Agency for a change? Now that’s a treat. 

Over the next month, the CRA, Canada’s tax agency, says it will begin sending out reminders to tens of thousands of Canadians to let them know they’ve got money owed to them they haven’t yet claimed.

On Monday, the CRA said it has roughly $1.4 billion worth of uncashed cheques on its books, some of which has been owed as far back as 1998. As of May, 8.9 million Canadians had some sort of uncashed cheque attached to their name. The average amount owed is $158, the tax agency said.

While the CRA handles billions of dollars in taxes and rebates every year, not all of it makes it into the hands of Canadians who are entitled to it, mostly due to people either losing the cheques, or changing addresses, meaning they never received it in the first place.

“We want to make sure this money ends up where it belongs. In taxpayers’ pockets!” the tax agency said.

The CRA said it will soon notify roughly 25,000 recipients of the Canada child benefit and related provincial/territorial programs, GST/HST credit and Alberta Energy Tax Refund if they are owed money, and that another two groups of 25,000 will be notified this November and in May of 2023.

But if you think you may be one of those lucky Canadians, you might want to be a little bit more proactive. Read more

You can check if you have uncashed payments from the Canadian Revenue Agency by logging in to or signing up for an online CRA account. (Graham Hughes/The Canadian Press)

Customers cry foul as Air Canada, WestJet continue to deny certain compensation claims despite new directive

Judging from plenty of anecdotal evidence, flying has been a bit of a headache lately.

Long flight delays and crew shortages have led to mayhem at many Canadian airports. 

But a recent Canadian Transportation Agency (CTA) decision was supposed to help clear the air on at least once source of frustration: the rules around flight compensation. 

When issuing a decision in a WestJet case on July 8, the transport regulator clarified that, in general, airlines can’t deny passengers compensation for flight disruptions caused by crew shortages. 

However, the clarification has only ignited fury for some passengers, including Frank Michel, who was denied compensation by Air Canada, and Jennifer Peach, denied by WestJet, due to crew shortages and constraints and safety concerns. 

“It’s insulting,” said Michel of Marquis, Sask.

Under federal rules, airlines only have to pay compensation — up to $1,000 per passenger — if the flight disruption is within the airline’s control and not safety-related. 

WestJet and Air Canada each declined to comment on individual cases, but both said they abide by federal air passenger regulations. WestJet said that safety is its top priority. Air Canada said airlines shouldn’t be penalized for cancelling flights for safety reasons. 

But Michel says the company isn’t playing by the rules.

“CTA has already made it clear that crew constraints is not an acceptable excuse,” he said. “It’s not a safety issue. It’s a management issue. You have to manage your resources.” Read more

Leigh and Frank Michel of Marquis, Sask., were denied compensation by Air Canada after flight disruptions in June left them sleeping on an airport floor. (Frank Michel)

You tip your hairdresser, but what about your mechanic? It might only be a matter of time

You probably tip the person who cuts your hair. Should you do the same for the person fixing your car? 

Customers are increasingly seeing a gratuity option on card payment machines in industries where tipping was never previously part of the cost, from auto shops to fast food giants. 

The phenomenon, dubbed “tip creep,” is leaving a bad taste for some consumers, who have vented online about being asked if they want to pay an extra 15 per cent or more on top of the price of a takeout pizza, oil change or propane tank refill. 

“Tipping is spreading to a lot more places right now, so where we wouldn’t have previously been prompted to tip, now it seems to be a lot more common,” says Simon Pek, an associate professor at the University of Victoria’s Gustavson School of Business who researches tipping practices.

As customers shift away from carrying cash, it’s easier than ever for any business to ask for a little bit of extra money by adding the automatic prompt — what psychologists call a “tip nudge” — to their card payment machine.

Inflation may play a factor, too. Business owners, for example, may see adding a tip button as a way to give in to workers’ demands for higher pay without necessarily affecting their bottom line. 

“We’ll still see a lower sticker price, we’ll still buy the product, and then adding 10 to 20 per cent after — it might be frustrating, but people still end up doing it, and that’s often cheaper for a company than having to pay those wages,” said Pek. Read more

Do you have an inflation story to share? Email us at marketplace@cbc.ca

With fewer customers carrying cash, companies are shifting away from the traditional tip jar on the counter to add a gratuity option on their card payment machines. Here, a tip jar is pictured at a Vancouver cafe on April 30, 2019. (Jan Zeschky/CBC)

What else is going on?

Cineplex ekes out $1.3M quarterly profit — its first since pandemic began
11 million people saw a movie at a Cineplex location during the quarter, up from 1 million last year.

Polio largely vanished thanks to vaccines. So why is it now back in more countries?
Infections, wastewater samples in U.K., U.S., Israel point to challenges in wiping out virus globally.

Climate change is hurting our mental health. These researchers want to help
Scientists across Canada are trying to learn enough about climate anxiety to prevent and treat it.

Marketplace needs your help

Marketplace is marking its 50th season and you’re invited to celebrate with us! Join us for a live taping in Toronto where you’ll get a sneak peek of our launch episode this fall.There will be prizes and light refreshments available, but tickets are limited. Sign up here

Have you been travelling recently and noticed that your hotel is no longer providing services they used to, like breakfast or daily housekeeping? We’d like to hear about products and services where you think companies are “skimping out.” Email us at marketplace@cbc.ca

Adblock test (Why?)



Source link

Continue Reading

Trending