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Energy & Commodities

The Low Oil Price Guts Another OPEC Oil Exporter

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Posted by Steve St. Angelo - SRSrocco Report

on Thursday, 21 September 2017 07:09

The low oil price is negatively impacting another OPEC oil exporter as it continues to liquidate its foreign exchange reserves.  Algeria, like Saudi Arabia, has seen its international reserves plummet by more than 40% as the oil price fell in half since 2014.

Algeria joined OPEC back in 1969 and is currently producing 1.1 million barrels of oil per day (mbd).  While Algeria is not one of the larger OPEC members, it still exports roughly 670,000 barrels of oil per day.  At $50 a barrel, the country receives $33.5 million a day in oil revenues.  However, Algeria’s oil revenues have taken a nose-dive as the oil price declined from over $100 in 2014 to below $50 currently:

Algeria-Net-Oil-Export-Revenues-2005-2016

As we can see in the chart above, Algeria’s net oil export revenues fell from $61 billion in 2012 to $19 billion last year.  Thus, Algeria’s net oil export revenues fell nearly 70% in the past four years.  This has negatively impacted the country’s financial balance sheet.  To make up for declining oil revenues, Algeria has liquidated $70 billion of its international reserves since the end of 2014:



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Energy & Commodities

Crude Oil Invalidated Breakout - What's next?

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Posted by Nadia Simmons - Sunshine Profits

on Tuesday, 12 September 2017 06:20

On Friday, crude oil moved sharply lower and lost over 3% after investors digested the EIA report and reacted to the increase in crude oil inventories. Thanks to these circumstances, light crude invalidated the earlier breakout above the resistance area and slipped well below $48. What does it mean for the commodity?

Crude Oil’s Technical Picture

Let’s take a closer look at the charts below (charts courtesy of http://stockcharts.com).

2017-09-11-wtic-W

On Thursday, we wrote the following:

Yesterday, crude oil extended gains, but did this increase change anything? In our opinion, it didn’t. Why? As you see on the weekly chart, despite Wednesday’s move, the black gold is still trading under the purple declining resistance line based on the previous highs and the 50-week moving average, which together were strong enough to stop oil bulls in the previous months.



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Energy & Commodities

Hurricane Harvey Tosses Global Oil Markets Into Chaos

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Posted by OilPrice.com

on Wednesday, 30 August 2017 06:48

a1003054b7a3f229fd35e769a65189beThe most powerful Hurricane to hit Texas in more than 50 years has devastated much of the coast, and the historic flooding is now causing havoc in the energy markets.

The rain is not over, and will continue over the next few days, spilling a year’s worth of rain within a week.

ExxonMobil shut down its Baytown refinery, the second largest in the United States with a capacity of 560,500 bpd. Royal Dutch Shell closed its 360,000 bpd Deer Park refinery, according to S&P Global Platts, and Phillips 66 shut down its 247,000 bpd Sweeny refinery. 

All port facilities in Houston and Corpus Christi were also shut down on Monday, not open to vessel traffic. That means that no refined products or crude oil will be either imported or exported for the time being.

The implications of the refinery outages and the port closures could be dramatic, although how long it will last is uncertain. The first obvious effect is a disruption to the production of refined products, which could have substantial effects on the U.S. fuel supply. As of Monday morning, more than 2.3 million barrels of daily refining capacity was knocked offline, according to Reuters, or about 13 percent of the nation’s total. That has already forced gasoline futures upby 7 percent to their highest levels in two years.

The effects will reverberate well outside of Texas. For example, the massive refineries on the Gulf Coast send gasoline through a major artery to the U.S. Mid-Atlantic and Northeast. The disruption will mean that much of the country could see higher gasoline prices soon. The Gulf Coast also exported 2.7 mb/d of refined products in May, much of which was sent to Latin America and Europe.



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Energy & Commodities

TROUBLE FINANCING ITS DEBT: Massive Decline Rates Push U.S. Shale Oil Industry Closer Towards Bankruptcy

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Posted by Steve St. Angelo - SRSrocco Report

on Friday, 25 August 2017 07:41

The U.S. Shale Oil Industry is in serious trouble as its debt spirals higher due to its massive production decline rates.  While the Mainstream media continues to put out hype that the shale oil industry can produce oil at $30 or $40 a barrel, the reality shows that it’s becoming difficult just to finance its debt.

Yes, it’s true.  Many of the shale oil companies are bringing on new wells just to pay the interest on their debt.  Now, this wasn’t the case back in 2008 when the U.S. Shale Oil Industry first took off as most of the shale energy companies held very little debt and paid a tiny percentage of their operating income to finance its debt.

For example, Continental Resources who labels itself as “America’s Oil Champion” is one of the larger shale oil producers in the Bakken Shale Oil Field in North Dakota.  Before Continental Resources started to pour money into the Bakken, its total debt was $165 million, and its annual interest expense was a paltry $13 million in 2007:.

Continental-Resources-Interest-Expense-768x135

However, if we scan across the table above, we can see that Continental Resources paid $321 million in 2016 just to service its debt that has now ballooned to $6.5 billion.  If we divide the $321 million interest expense by its $6.5 billion in debt, it turns out to be about an average 5% interest charges.   Can you imagine paying nearly one-third of a billion dollars in an interest payment?

To get a better idea how bad the financial situation is at Continental Resources, let’s look at their Q2 2017 report:



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Energy & Commodities

PART II – Delinquencies Pile Up – Will Commodities Make A Massive Move Soon?

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Posted by Chris Vermeulen - Active TradinPartners.comers.com

on Thursday, 24 August 2017 07:05

In our previous article PART I (Delinquencies Pile Up – Will Commodities Make A Massive Move Soon?) we explained and showed you the delinquencies rising in various areas of the credit market and what it means.

Now, we get to the fun part of our research.  Assuming our Head-n-Shoulders Top formation continues to play out and the US and Global markets continue to play the Credit/Debt game (and we are really watching China as recent news from the IMF and others is that China is trying to hide massive debt defaults), what do we expect the markets will do and how can we profit from these moves?

In short, we are cautiously watching the global markets for signs of continued weakness and signs of a debt contagion situation.  There has been quite a bit of news that global debt is an issue with China, Italy, Venezuela, Greece, Puerto Rico and others.  Our concern is this debt issue turns into a cancer like disease for the rest of the globe.  And in our opinion, it would be rather easy for government, banking or corporate institutions to become a “black hole” that creates another crisis event.

Our recent article reviewing the potential of a Technology “DOT COM Do-Over” clearly illustrated the hype that is current found within the global technology markets.  Technology has been on fire for the past 3+ year because global ROI has languished and the global FANGS have provided a much greater ROI opportunity than almost anything else.  This focus on technology may setup to become an issue that drives a substantial market correction.

2000-tech-crash-1

....for larger charts & more analysis continue reading HERE



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