Big Oil Stocks Safe?

 5 Big Oil Stocks to Buy for the Rest of 2015
The Cowen team warns that there could be what they term “commodity induced pullbacks” that investors should be aware of. Translated, a steep drop in oil or natural gas prices could spur another stock sell-off. The analysts are very positive on five big oil stocks for investors to own going forward.
Oil Majors' $60 Billion Cuts Don't Go Far Enough as Crude Slides
The world’s biggest producers will need to trim investments by a further $26 billion to meet sacrosanct dividend payments, according to Jefferies Group LLC. Capital spending will have to fall 10 percent next year, Banco Santander SA says. Oil companies are bracing for “lower for longer” prices as a global supply glut persists, dragging crude to the lowest close since March 2009 in New York on Tuesday. Royal Dutch Shell Plc, which has reduced spending 20 percent this year, has “more levers to pull” should the market weaken further, according to Chief Executive Officer Ben Van Beurden. The tightening means international producers such as Shell and Chevron Corp. can break even at a lower crude price -- about $10 lower than before they started cuts last year, according to Jefferies analyst Jason Gammel. Oil companies are bracing for “lower for longer” prices Still, they’ll need Brent at $82 a barrel next year to balance cash flow from operations with investments, he said. Santander’s Jason Kenney puts the breakeven level at $70, about $20 above current prices. That gap is reflected in energy stocks, which are among the world’s worst performers this year. Some oil majors have mitigated the impact of crude’s slump by bolstering the share of natural gas in their output. Shell and Total SA now produce more gas than oil and are the least exposed to lower prices, while Chevron is most at risk. Each $1 change in the price of Brent affects Shell’s pretax profit by about $330 million, while for BP the impact is $300 million, according to data from the companies. Chevron’s cash flow would be hit by as much as $350 million. Of the three, BP pumps the most crude.
Better Times Ahead For Oil, If You Can Believe It
Numerous challenges exist. Every day there’s yet another reason why oil prices will never increase or economic conditions improve. Iran. China. Greece. Global inventories. OPEC overproduction. Rising North American rig counts. Carbon taxes. Corporate tax increases. Royalty reviews. No pipelines. The news is so depressing, more are saying this downturn is the worst ever, although there is significant evidence to the contrary. This is not new. What the industry has always done is extrapolate; whatever happened yesterday will continue. If things are good, they always will be. If it is bad, it will remain so forever. After 36 years of writing about the always-volatile oilpatch, the only constant is the herd is usually wrong, regardless of the direction it is headed.

... There is likely no good news in the short term, the next couple of months, that is. Prices may go lower again based on market sentiment. Keep the faith. In the medium term—the next six months, hopefully—there will be growing stability and confidence if federal and provincial politicians don’t do anything really awful. But the long term looks good. The herd is wrong again and global oil supply and demand will prove it.


  1. WSJ Survey: Oil and Inflation Are Stubborn Disappointments

    As oil prices plunged back below $50 and slid toward $40, it left economists’ forecasts as wrecked as a 1980s oil town in West Texas. At no point in the last 12 months have economists anticipated that oil could drop so low.

  2. Oil's Worst-Ever Summer Signals Price Rout Is Nowhere Near Done:

    OPEC’s biggest members are pumping near record levels to defend their market share and U.S. production is withstanding the collapse in prices and drilling. The oil market is still clearly oversupplied and “it will get more so as refiners go into maintenance,” Kleinman said.

    Oil demand usually climbs in the summer as U.S. vacation driving boosts purchases of gasoline and Middle Eastern nations turn up air-conditioning.


Any anonymous comments with links will be rejected. Please do not comment off-topic