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S&P and NASDAQ close at record highs

  
Analysis, Video
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51st record close for the S&P today

The S&P and Nasdaq is closing at yet another record close
  • For the S&P it is the 51st record close for the year.
  • The S&P and Nasdaq have closed higher for the 5th consecutive day
  • The Dow is up for the 4th day in a row.
  • Dow is less than 1% from its all-time high

The final numbers are showing:

  • The Dow rose 39.24 points or 0.11% at 35405.50
  • The S&P rose 9.96 points or 0.22% at 4496.19
  • the NASDAQ index rose 22.06 points or 0.15% at 15041.86
  • Russell 2000 rose 8.36 points or 0.37% at 2239.27
Financials, energy, industrials led the way to the upside, while healthcare, consumer staples, real estate and technology lagged.
Some specific winners included:
  • Western Digital, +7.87%
  • Uber, +3.41%
  • American Express, +3.11%
  • Micron, +2.8%
  • Novavax, +2.21%
  • JP Morgan, +2.06%
  • PNC financial, +1.96%
  • Delta Airlines, +1.92%
  • Wells Fargo, +1.92%
  • Nvidia, +1.88%
Some specific losers included:
  • express, -11.43%
  • Koss, -6.6%
  • Game Stop, -4.9%
  • Blackberry, -3.24%
  • Palantir, -2.91%
  • Tencent, -2.57%
  • Biogen, -1.89%
  • Pfizer, -1.82%
  • Beyond Meat, -1.6%
  • Alibaba, -1.51%

S&P and NASDAQ close at record highs

  
Analysis, US Market
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Russell 2000 leads the way with a gain of 1%

The S&P and NASDAQ are both closing at record high levels.

  • S&P and NASDAQ up for the fourth consecutive day
  • Russell 2000 leads Way with a 1% gain
  • Dow rises for the second consecutive day
  • NASDAQ index closed above the 15,000 level for the first time ever
  • Energy (+1.7%), discretionary and materials led the gains
  • Consumer staples (-0.8%), real estate (-0.7%), utilities (-0.7%) saw the declines
The final numbers are showing:
  • Dow industrial average rose 30.55 points or 0.09% at 35366.26
  • S&P index rose 6.7 points or 0.15% at 4486.23
  • NASDAQ index rose 77.14 points or 0.52% at 15019.79
Meme, Chinese companies and reopening stocks did better:
  • Game Stop, +27.66%
  • AMC +20.15%
  • AirBNB, +9.89%
  • BlackBerry, +9.62%
  • Tencent, + 9.26%
  • Robinhood, +8.85%
  • Crowdstrike, +8.07%
  • Alibaba, +6.6%
  • Goodrx, +5.74%
  • Roblox, +4.92%
  • FireEye, +4.72%
  • Koss, +4.64%
  • Bed Bath & Beyond, +4.53%
  • Southwest they are, +4.31%
  • Chewy, +4.29%
Losers included:
  • Traeger, -9.49%
  • Novavax, -7.09%
  • Moderna, -4.11%
  • Pfizer -3.10%
  • Western Digital -2.39%
  • Uber,-2.05%
  • General Mills, -1.96%
  • First Solar, -1.6%
  • snap, -1.15%
  • AMD, -1.03%
  • Home Depot, -0.9%
  • Nvidia, -0.77%
  • Costco, -0.71%
  • Microsoft, -0.65%
  • Gilead, -0.41%

Oil likes what it heard from OPEC, prices edge higher early

  
Analysis, Crude
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Crude starts the week higher

Crude starts the week higher
WTI crude rose as high as $39.90 shortly after the open. It’s since ticked a few cents lower to $39.83, which is up 25-cents on the day.
OPEC+ announced a one-month cut extension on the weekend but it wasn’t all good news as some Libyan production came back online.
Keep a close eye on the $40 with crude in the March gap. The bottom end of it is $41.05.

Here are the main points so far of the OPEC+ agreement to cut oil output (and the 3 things they missed)

  
Analysis, Crude
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OPEC+ and the G20 have agreed to cut oil production by just under 10 million barrels / day.

Oil trading begins for the week at 2200GMT with Sunday evening trade on CME,
ICYMI … :
  • a cut of circa 9.7 million barrels a day of oil across OPEC+ and the G20
  • 13-nation OPEC and others (Russia, US are two) agreed to share cuts

Its unclear how the cuts are to be apportioned, and how the US intends to enforce its promised cuts, but indications are (its is very unclear, but these from sources, awaiting confirmation):

  • Mexico cut 100,000 barrels a day
  • US by 300,000 barrels / day
  • Saudi Arabia’s production to be reduced to 8.5m bpd (from the current whopping 12 million bpd)

When oil trade reopens for the week we’ll see how successful the agreement is, so far, at limiting further price falls for oil.

The important factors that the supply cut does not, is not able, to address is of course is the demand side of the equation. Demand is lower due to:
  • social distancing lock downs of economies
  • the further, recessionary economic impact of these measures (the impacts will linger)
Back to the supply side to finish up, there is a huge overhang of oil in storage.
OPEC+ G20 cut oil production

Why OPEC+ will cut even without US participation

  
Analysis, Crude
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You don’t need $20 oil to kill shale

There’s a narrative emerging around OPEC+ and shale: The mainstream thinking is that Russia and Saudi Arabia want to drive crude prices lower to kill US frackers.
I don’t think it’s correct, or at least not wholly correct.
The reality is that shale didn’t make any money in 2019 at $55 oil. Even at that price, it was on its way to mass insolvencies, albeit at a slower pace. I’ve been writing about the bust in shale for more than a year.
All this talk that OPEC+ wont’ cut without the US is a bluff. Why? Because shale is still going bust at $30-$40 oil.

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Oil tanks at vital Africa storage hub said to be almost full as excess crude floods the market

  
  Analysis
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The Saldanha Bay storage hub is said to be nearing capacity

Oil

For some context, Saldanha Bay is a vital hub for crude oil storage because of its strategic location in which it allows for transport to demand centers in both Europe and Asia.

According to Bloomberg, the hub boasts about 45 million barrels in capacity but S&P Global’s latest report highlights that it has the capacity of up to 60 million barrels.
Nonetheless, sources familiar with the hub’s operations has told Bloomberg that the site is nearly at capacity – adding that there might be just room for a couple of tanks holding specific crude grades, but it is full otherwise.

This situation has already been forewarned by many oil traders and pipelines over the past few weeks and with Saudi Arabia continuing to flood the market, what we may be left with are a boatload of oil barrels going to be stuck at sea at this point.

Saudi Arabia has slashed its oil price for all crude

  
  Analysis
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State oil giant Saudi Aramco statement on Saturday – cuts its official selling price for April for all its crude grades to all destinations

UPDATE – news about also Saudi plans to ramp up output, to well in excess of 10m bpd – I’ll post more on this separately
  • its Arab light crude oil to the United States cut to a discount of $3.75 per barrel, down $7 a barrel from March
  • to Northwestern Europe to a discount of $10.25 per barrel to Ice Brent, down $8 a barrel
Comes in the wake of the crumbling of OPEC+ plans late in the week, the OPEC/Russia pact expired without further agreement after 3 years in place.
State oil giant Saudi Aramco statement on Saturday - cuts its official selling price for April for all its crude grades to all destinations

FT: Saudi Arabia is pushing to make a substantial cut in oil production when Opec meet

  
Analysis, Crude
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OPEC meet 5 and 6 March in Vienna, the Financial Times says Saudi Arabia  is asking producers including Russia for a production cut of an additional 1m barrels a day

FT citing five people familiar with the talks,
Under the proposal, Saudi Arabia would account for the bulk of the new 1m b/d cut
  •  Kuwait, the United Arab Emirates and Russia would split the rest
  • Deal not yet been agreed
  • Moscow still hesitant
This proposal is up from the 600k bpd proposal previously floated.
OPEC meet 5 and 6 March in Vienna, the Financial Times says Saudi Arabia  is asking producers including Russia for a production cut of an additional 1m barrels a day

IEA sees fall in Q1 oil demand, the first quarterly drop in more than a decade

  
Analysis, Crude
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IEA estimates Q1 oil demand to fall by 435k bpd year-on-year

Oil
  • Q2 pglobal oil demand set to grow by 1.2 mil bpd
  • Assuming that economic activity returns progressively to normal
  • Cuts 2020 oil demand growth forecast by 365k bpd to 825k bpd
The changes to the forecasts and estimates are due to the coronavirus outbreak impact as IEA sees the widespread shutdown of the Chinese economy weighing heavily on demand – more so than OPEC – but they estimate a quicker recovery in the coming quarters.
That said, the agency says that the impact of the coronavirus outbreak will be felt by the oil market throughout the year and it is “hard to be precise about the impact” now.
Back to the headline reading, IEA had previously forecast a growth of 800k bpd in Q1 compared to a year earlier but now expect a contraction of 435k bpd instead – the first contraction since the global financial crisis back in 2009.

OPEC cuts Q1 oil demand growth estimate by 440k bpd on coronavirus outbreak

  
Analysis, Crude
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OPEC releases its latest report on the oil market

OPEC
  • 2020 oil demand growth outlook cut by 230k bpd to 0.99 mil bpd
  • Coronavirus outbreak adds to uncertainties for oil market this year
  • The situation needs continuous monitoring
  • To face oil surplus of 570k bpd in Q2
The downward revisions are not surprising as they don’t just see the virus having an impact on the oil market in Q1, but also for larger portions of the year.
This is in part why they are trying to push forward with the additional output cuts but so far we are still waiting on a response from Russia regarding the latest proposal.
The thing about Russia is that, they always play hard ball but eventually cave when it comes to OPEC+ executing new output cuts. However, that doesn’t mean they will necessarily contribute and the bulk of the responsibility will fall on Saudi Arabia instead.
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