Energy stocks lead a broad rally as the price of oil soars

[rooster59]

Energy stocks lead a broad rally as the price of oil soars

MARLEY JAY, AP Markets Writer


NEW YORK (AP) — U.S. stocks made their biggest gain in more than a month on Friday as oil prices surged, lifting energy stocks. Tech stocks also climbed as Apple jumped the most since August.

Energy companies soared after the price of U.S. crude jumped 9 percent. Oil prices reached their lowest level in 12 years earlier this week, but they jumped the last two days.

The gain Friday, combined with a smaller increase the day before, gave the market its first weekly advance after three weeks of declines. It's been a dismal start to the year so far, and on Wednesday the Dow Jones industrial average tumbled as much as 565 points before recouping some of its loss.

Much of the volatility has been driven by wild swings in the price of crude oil, which many investors see as a barometer for how well the global economy is doing. A sharp drop in oil prices over the last year and a half has decimated profits at oil companies, and many expect the damage to continue as global production of oil far outstrips demand.

As for market turbulence, many expect more of that, too.

Jim Paulsen, chief investment strategist for Wells Capital Management, said he thinks the S&P 500 will slide to around 1,800 before a real recovery comes. That's below even the darkest moments from Wednesday's midday swoon.

"It's going to continue to be a struggle," he said. "Everyone will be convinced we're heading for recession, everyone will be convinced we're in a bear market."

On Friday the Dow Jones industrial average rose 210.83 points, or 1.3 percent, to 16,093.51. The Standard & Poor's 500 index had its best day since early December, gaining 37.91 points, or 2 percent, to 1,906.90. The Nasdaq composite index made its biggest gain since September, adding 119.12 points, or 2.7 percent, to 4,591.18.

For the week, the Dow rose 0.7 percent, the S&P 500 climbed 2 percent and the Nasdaq increased 2.3 percent.

European markets also rose Friday on hopes for more economic stimulus from the region's central bank. In Japan, the Nikkei 225 index had its best day in four months as investors hoped the Bank of Japan will also step in.

In energy trading, U.S. crude rose $2.66 to $32.19 a barrel in New York. Brent crude, a benchmark for international oils, rose $2.93, or 10 percent, to $32.18 a barrel in London. U.S. oil climbed 21 percent over the last two days and it has recovered about half its losses from earlier in the year.

Among energy stocks, pipeline operator Kinder Morgan rose $1.46, or 10.5 percent, to $15.34 after it jumped 16 percent Thursday. Pipeline company Williams Cos. added $3.70, or 23.1 percent, to $19.74. Devon Energy gained $1.45, or 6 percent, to $25.63.

Goldman Sachs analyst Jeffrey Currie said energy prices have fallen so far that the industry is making real cuts in production. "We are now at a price level that is creating real fundamental change," he said.

Apple, which has lost about a quarter of its value in the last six months, rose $5.12, or 5.3 percent, to $101.42. Microsoft gained $1.81, or 4 percent, to $52.29. Facebook added $3.78, or 4 percent.

France's CAC 40 added 3.1 percent and Germany's DAX rose 2 percent. Britain's FTSE 100 climbed 2.2 percent.

Japan's Nikkei 225 index rose 5.9 percent. Earlier this week the index entered a bear market, meaning it was down 20 percent from a recent peak. South Korea's Kospi gained 2.1 percent and Hong Kong's Hang Seng added 2.9 percent.

Telecommunications and utilities stocks also rose and turned positive for the year. They're both up 1 percent while the other eight industrial sectors in the S&P 500 are much lower in 2016. Last year the S&P 500 utility index fell 8 percent and telecom stocks fell 2 percent.

Paulsen, of Wells Capital Management, said investors turn to utilities and telecom stocks when the market gets rough. Companies in those industries pay relatively large dividends, which means their prices are more stable and the stocks behave almost like bonds.

"They are just the most conservative sector of the stock market," he said.

American Express gave a negative outlook for 2016 and 2017. The company expects its earnings per share to fall this year even though it's selling credit card accounts tied a co-branded credit card it offers with Costco. That relationship is ending.

Amex fell $7.58, or 12.1 percent, to $55.06, its biggest loss in almost seven years. American Express is a Dow component, and that loss caused the Dow to lag the other major U.S. indexes.

Gold and copper producer Freeport-McMoRan tumbled 39 cents, or 9.1 percent, to $3.94. Its shares have dropped 42 percent in 2016 after huge plunges the previous two years. The company has struggled as metals prices have fallen, and its decision a few years ago to invest in oil and gas came shortly before those prices also plunged.

In other energy trading, wholesale gasoline added 5.3 cents, or 5.1 percent, to $1.084 a gallon. Heating oil picked up 9.8 cents, or 10.9 percent, to 99.6 cents a gallon. Natural gas inched up to $2.139 per 1,000 cubic feet.

Bond prices fell. The yield on the 10-year Treasury note rose to 2.05 percent from 2.03 percent.

The price of gold fell $1.90 to $1,096.30 an ounce and silver fell 3.7 cents to $14.06 an ounce. Copper rose 0.6 cents to $2.003 a pound.

The dollar rose to 118.78 yen from 117.50 on Thursday. The euro weakened on the prospect of further ECB stimulus. It fell to $1.0791 from $1.0875.

-- (c) Associated Press 2016-01-23

[maoro2013]

Why did oil prices increase, especially by 9%, when production far outstrips demand, someone must be stockpiling which raises a question of why.

[Usernames]

Why did oil prices increase, especially by 9%, when production far outstrips demand, someone must be stockpiling which raises a question of why.

There is a storm on the East Coast. People think heating oil. Shorts cover their positions and the oil futures go up along with the oil stocks. Interestingly, ng hardly moved at all, and ng has the big drawdowns in storage when a winter storm hits. That tells me ng is already so low that nobody was short, while the oil rally is almost all due to short covering. I imagine the shorts will re-establish their position next week after the storm and push it down again, taking the oil stocks with them.

[pedro01]

Why did oil prices increase, especially by 9%, when production far outstrips demand, someone must be stockpiling which raises a question of why.

The price of March oil futures is what they are discussing.

It is by no means a massive increase. Oil can very easily move $2 or $3 in a day and it is not news.

It is the result of speculation in oil futures contracts, not actual supply & demand.

This is just the financial press jumping at shadows.

[Pinot]

Wednesday was the worst day I ever had in the market. Today was the best with my investment up about 3%. 3% in a day! Just when I think it's time to sell, I can't take anymore, the market does this.

I always seem to do the wrong thing. I'm terrible at timing the market, so I've just decided to ride it out and collect my monthly dividends. I think of my investments as an annuity that pays me every month. I make about 7%/yr plus or minus the value of the stock investing in preferreds,utilities and ETFs the write options. A few individual stocks, T, V, Vz.

Fairly conservative in the past but not any more.

It's volatile and not much fun but what else are you going to do? Buy gold? No. Put on a seat belt and keep your eyes closed.

[daveAustin]

I'm terrible at timing the market

As are 99% of those that play [emoji39]

[bendejo]

Of course oil will rebound at some point. I'm looking for a way to ride it. A number of smaller companies have been de-listed and are now penny stocks due to the pressure on oil price.

No more USO, tried that once and got caught in contango.

I suspect there is a big picture aspect to this glut that goes beyond simple market pressures, destroying both legit and black market (wink wink) petroleum-based economies.

[wabothai]

What is the price of an empty barrel?

[Tywais]

What is the price of an empty barrel?

Not sure but from this article apparantely more then the cost of the oil at current prices.

Oil prices continued to fall Thursday, coming in at $29.60 per barrel at time of writing.

For some context, here's what's now more expensive than black gold:

• Getting the oil changed on your car.
• Enough KFC for a family of four.
• The actual barrel oil comes in.
• A pair of Crocs, Inc. (NASDAQ: CROX).

For more brain blasts, look at oil like this:

• The last time oil prices were this low, Saddam Hussein was alive and Saudi Arabia led oil exports with around 7 million barrels a day. Now, the U.S. leads oil exports with 12.5 million barrels a day.
• For the cost of 18 barrels of oil, you can park for a month in downtown Manhattan.
• A standard Rolls-Royce Phantom is worth 14,116 barrels of oil.
• A barrel of oil is 42 gallons; 42 gallons of bottled water cost around $53, as much as 1.8 barrels of oil.

Read more here - Yahoo

[billphillips]

What is the price of an empty barrel?

About the same price as the crude oil it could contain if it were full. Crude is seldom stored or shipped in barrels these days. It's merely a unit of measurement.

[i claudius]

Lets face it for years we have been told oil was running out and The Saudies have kept the prices high as they can by switching off the taps,now that we know a lie and America and its Auntie have shot that myth to pieces,Saudi etc have realised they can no longer hold us to ransom and have opened the taps to sell as much as they can ,while they can,

[fakser]

Why did oil prices increase, especially by 9%, when production far outstrips demand, someone must be stockpiling which raises a question of why.

Because no matter how big are the oil reserves, there is a minimum fixed cost of production.

It is somewhere in the 35 US$/Barrel.

With too low oil price, countries and economies will collapse.

There must be, and there will be, some global regulation of oil price.

[pedro01]

Of course oil will rebound at some point. I'm looking for a way to ride it. A number of smaller companies have been de-listed and are now penny stocks due to the pressure on oil price.

No more USO, tried that once and got caught in contango.

I suspect there is a big picture aspect to this glut that goes beyond simple market pressures, destroying both legit and black market (wink wink) petroleum-based economies.

Haliburton & BP are a really good deal right now.

[Usernames]

What is the price of an empty barrel?

About $99

[Usernames]

What is the price of an empty barrel?

About the same price as the crude oil it could contain if it were full. Crude is seldom stored or shipped in barrels these days. It's merely a unit of measurement.

It is shipped in barrels and trucks, especially from some remote wells in the Canadian hinterland. Which is why they are only getting around $13/barrel at the moment. It's an expensive enterprise.

[sandmike]

I claudius .. the Saudi's, and others in opec are pumping as much as they can in order to push the price down, and drive the USA producers, and anyone else with high production costs out of business. If they succeed then you will see the price of crude oil rise again. The Saudis have enough cash reserves to keep oil at this price for the next 5 years, and their production costs are less than $10 per barrel .. now Iran is shipping to all buyers again, the price is only likely to head lower ... on the upside, quite a few refineries are making good profits again because they make money on the difference in price between crude oil and refined products ... gasoline, jet fuel, diesel, etc.

Edited January 23, 2016 by Scott
Signature line edited out

[sandmike]

Oh, and in other news, Saudi recently doubled the pump price of gasoline, and Bahrain lifted the price by 60% ..... to approx 43 cents per litre. In Bahrain it was the first fuel price increase for 33 years ... times are hard ...

Oops, sorry Scott

Edited January 23, 2016 by sandmike

[sirineou]

Oil stocks had taken a beating, This rally is only a profit taking event.

At some point , some say now, many oil production facilities will become unprofitable

Then unproductive fields will begin to drop of reducing supply and increasing price..

It has already started, most business bankruptcies this year are energy related, expect to see many more as oil companies are leveraged to the hilt.

[gemguy]

Why did oil prices increase, especially by 9%, when production far outstrips demand, someone must be stockpiling which raises a question of why.

Not making like I am an expert on the subject but I have read several very convincing articles about how the price of oil will rise and fall also by way of commodities trading activities.

Below is just one of many such articles.

http://www.globalresearch.ca/perhaps-60-of-today-s-oil-price-is-pure-speculation/8878

Although it is true there presently is a glut of oil in the market, while the consumption of oil has fallen back, a large part of the sudden jumps seen in oil prices in 24 hours or say 1 week is caused by all the oil price speculation and profiteering occurring by way of large international banks and hedge funds with billions of dollars at their disposal used to buy oil futures.

Some call it a conspiracy or collusion to control the prices but I do not buy into that as the only reason and only factor....However, if you have 100 billion dollars at your disposal and you want to effect the market price of oil, or near any commodity, I am certain you could well effect the market prices of said commodity ..whether the price falls and you profit or the price rises and you make profits the mechanisms are in place for such large amounts of money being used to effect the price of a certain commodity...in this case oil.

Always take into consideration the oil futures trading mechanism that can and do effect the price of oil regardless of supply and demand factors when wondering about the price of oil and all that is entailed.

Cheers

Edited January 24, 2016 by gemguy

[gemguy]

What is the price of an empty barrel?

About the same price as the crude oil it could contain if it were full. Crude is seldom stored or shipped in barrels these days. It's merely a unit of measurement.

It is shipped in barrels and trucks, especially from some remote wells in the Canadian hinterland. Which is why they are only getting around $13/barrel at the moment. It's an expensive enterprise.

Most of it is transported by pipeline while a large percent is transported by oil tankers from one area of the world to another and commonly half way around the world.

The amount of crude oil carried by tankers trucks and more recently by increased volumes carried by rail transport services is still a small percent over all.....but yes small production capacity is and can be easily enough carried by road transportation services as there is yet to be any pipeline infrastructure built and offered to the crude oil producers in such remote regions as the more convenient way to transport their crude oil production to market

In recent years ( say the last 10 years to 15 ) there has been notable increases in the storage capabilities existing in several countries...but mainly the USA

The business of storing oil, on a contractual basis, by independent service companies was one of the many lucrative oil related business enterprises that saw a marked increase in oil storage services and total oil storage capacity throughout North America.

Most of the facilities are designed and built and offered as a storage service facility in relation to the logistics of pipeline transportation delivery activities that require oil to be temporarily stored before moving off into another direction being delivered to clients in various regions of the country.

Cushing Oklahoma is the worlds largest oil storage facility in the world and a crossroads point of many major pipeline companies.

https://en.wikipedia.org/wiki/Cushing,_Oklahoma

Check out the info and add this to your understanding of the immense amount of logistics involved in the crude oil transportation industry while many people do not understand or factor in the importance of the pipeline transport infrastructure when discussing the oil industry.

Cheers