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Tag Archives: barrel
Europe agrees to cap the price of Russian oil at $60 a barrel
London
CNN Business
—
The European Union has reached a consensus on the price at which to cap Russian oil just days before its ban on most imports comes into force.
News of the deal, which had needed approval from holdout Poland, was confirmed on Twitter by the president of the European Commission, Ursula von der Leyen, marking a key milestone in the West’s efforts to punish President Vladimir Putin without adding to stress on the global economy.
“Today, the European Union, the G7 and other global partners have agreed to introduce a global price cap on seaborne oil from Russia,” von der Leyen said, adding that it would strengthen sanctions on Russia, diminish Moscow’s revenues and stabilize energy markets by allowing EU-based operators to ship the oil to third-party countries provided it is priced below the cap.
The bloc’s 27 member states agreed Friday to set the cap at $60 a barrel, an EU official with knowledge of the situation told CNN on Friday.
The West’s biggest economies agreed earlier this year to establish a price cap after lobbying by the United States, and vowed to hash out the details by early December. But setting a number had proved difficult.
Capping the price of Russian oil between $65 and $70 a barrel, a range previously under discussion, wouldn’t have caused much pain for the Kremlin. Urals crude, Russia’s benchmark, has already been trading within or close to that range. EU countries such as Poland and Estonia had pushed for the cap to be lower.
“Today’s oil price cap agreement is a step in right direction, but this is not enough,” Estonian foreign minister Urmas Reinsalu tweeted Friday. “Intent is right, delivery is weak.”
A price of $60 represents a discount of almost $27 to Brent crude, the global benchmark. Urals has been trading at discounts of around $23 in recent days. Reuters reported that the EU agreement included a mechanism to adjust the level of the cap to ensure it was always 5% below the market rate.
The risk of settling on a lower price is that Russia could retaliate by slashing its output, which would roil markets. Russia previously warned that it will stop supplying countries that adhere to the cap.
With EU countries in alignment, the last remaining obstacle to a wider G7 agreement was lifted. A top US Treasury department official said Thursday that $60 would be acceptable.
“We still believe that the price cap will help limit Mr. Putin’s ability to profiteer off the oil market so that he can continue to fund a war machine that continues to kill innocent Ukrainians,” National Security Council coordinator for strategic communications John Kirby told reporters.
“We think that the $60 per barrel is appropriate and we think it will have that effect,” Kirby added.
The price cap is designed to be enforced by companies that provide shipping, insurance and other services for Russian oil. If a buyer has agreed to pay more than the cap, they would withhold those services. Most of these firms are based in Europe or the United Kingdom.
Investors are already on edge, with the European Union’s embargo on Russian oil traveling by sea set to take effect on Monday. Confusion about the impact of that measure, along with lingering questions about the price cap, have unsettled traders.
“There’s so much uncertainty and doubt and lack of clarity about the policy that no one’s really confident about how to act,” said Richard Bronze, head of geopolitics at the research firm Energy Aspects.
Oil prices have dropped sharply since the summer, as China’s coronavirus lockdowns and global recession fears have dented demand. OPEC and Russia announced a big production cut in October, but that had little sustained impact on prices. The EU embargo and efforts to set a price cap could begin to push them higher again.
— Chris Liakos and Betsy Klein contributed to this article.
Brent crude slides below $85 a barrel as dollar surges
An aerial view of Phillips 66 oil refinery is seen in Linden, New Jersey, United States.
Tayfun Cosku | Anadolu Agency | Getty Images
Brent crude fell below $85 a barrel Monday, as recession fears weighed and the U.S. dollar surged.
Brent futures for November settlement were trading down over 1% around $84.92 at 8 a.m. London time. West Texas Intermediate futures also fell to trade around $77.93.
The U.S. dollar surged to a high not seen since 2002 Monday, while sterling tumbled to a record low against the currency.
On Friday, both Brent and WTI futures fell around 5% to hit their lowest level since January.
It comes as central banks around the world — including the U.S. and the U.K. — continue to hike interest rates in an effort to tackle inflation.
Meanwhile, fears around an economic slowdown continue to mount, with Steve Hanke, professor of applied economics at Johns Hopkins University, putting the chance that the U.S. will fall into recession at 80%.
“If [the Fed] continue[s] the quantitative tightening and move that growth rate and M2 (money supply) into negative territory, it’ll be severe,” Hanke told CNBC’s “Street Signs Asia” on Friday.
This is a breaking news story and will be updated shortly.
Oil drops below $100 a barrel for first time since early May
The price of West Texas Intermediate crude tumbled as much as 10% Tuesday, to hit a low of $97.43 before closing at $99.50, down 8% on the day. Brent crude oil was down by more than 10% when it hit a low for the day of $101.10 a barrel, before settling at $102.77 at the close.
It’s the first time that WTI has been below $100 since May 11. That was also the last time Brent, which typically trades a bit higher, was below $102 a barrel. Brent has not been below $100 since April 25.
Wholesale gas futures fell as well, down almost 10% for the day at the close, or 36 cents a gallon.
The national average cost of a gallon of gas at the pump is now $4.80, according to the latest AAA reading, down one penny from Monday and 8 cents from a week ago. Gas prices crossed the $5 mark for the first time on June 11 and hit a peak of $5.02 a gallon on June 14.
Rising fears about the chances of a recession are the primary driver of the latest sell-off in oil and gasoline futures, said Tom Kloza, global head of energy analysis for OPIS.
Until fairly recently, oil and gasoline investors had believed that there was little in the way of market forces to keep prices in check in the near term. “There is now a perceived huge downward risk tied to recession risk,” he said.
There have been mounting fears of a recession in recent weeks, which has helped take oil prices sharply lower. Brent was at $123.58 a barrel on June 8, while WTI was at $122.11. But since that peak, the Consumer Price Index showed consumer prices hit a 40-year high, one of the key metrics that prompted the Federal Reserve to hike interest rates by three-quarters of a percentage point as a way of combating those price pressures. That has raised expectations that the central bank’s aggressive moves to cool the economy could cause job losses and a recession.
Oil and gas prices surged earlier this year after Russia’s invasion of Ukraine prompted the United States and its European allies to sanction Russian energy exports, effectively choking off one of the world’s largest producers.
But the supply of oil is only part of the equation traders consider when bidding on oil futures. Demand is the other part. And nothing kills demand like a recession, which reduces economic activity overall. When people get laid off, there are fewer people driving to work or to the store or other destinations.
The previous time gas hit a record high was during the Great Recession, when the national average reached $4.11 a gallon in July 2008. But by the end of that year, it had fallen 60%, to $1.62 a gallon, as demand plunged. But cheap gas was of little consolation to the nearly 3 million people who lost their jobs during those five months.
So far, drivers have seen relatively little relief at the gas pump from the recent fall in oil and gasoline futures. The national average price of gas has fallen only 4%, or 22 cents, since the June 14 record, while wholesale gas futures have dropped 22% since topping out at $4.28 a gallon on June 9.
US gasoline retailers have little incentive to cut prices more deeply with strong demand for gasoline with the summer driving season in full swing.
“There’s no compelling reason for retailers to lower their price more with this strong demand,” said Kloza.
There could be more price drops at the pump in the near term — a decline of another 10 cents a gallon in the next week or so wouldn’t be a surprise, Kloza said. Station owners who are paying less for wholesale gas will be watching to how much of the savings their competitors are passing on to customers before they set their own prices. But the expression that gas prices go up like a rocket and come down like a feather is likely to play out once again, Kloza said.
There likely won’t be any big declines until schools reopen and the summer driving season ends this fall, he predicted. There are also risks that further developments in Russian oil exports tied to the war in Ukraine or hurricanes hitting US oil infrastructure along the Gulf Coast could send prices climbing up rapidly once again.
“I wouldn’t put away the fives used in gas price signs quite yet,” he said.
Body From 1980s Homicide Is Found in Barrel at Lake Mead
A metal barrel containing the remains of a person killed in the 1980s was found on Sunday on the shore of Nevada’s Lake Mead, a discovery that the Las Vegas Metropolitan Police Department said was made possible by an ongoing drought.
“It’s really odd in the sense that had the lake never receded, we would never have discovered the body,” Lt. Ray Spencer of the Police Department said by phone on Monday.
Lieutenant Spencer said the police were trying to learn the victim’s identity. He declined to share details about the victim, including a possible age, sex or specific cause of death. It’s clear that the person “died as a result of a homicide,” he said, but he would not share how that was determined.
Based on items recovered inside the barrel, investigators believe the victim was killed in the 1980s, Lieutenant Spencer said. He declined to say what those items were.
The drop in the lake’s water level could result in other bodies being found at the lake, Lieutenant Spencer said. Rangers with the National Park Service find one or two bodies at Lake Mead every year, he said, “so it’s not uncommon to work a homicide out at the lake.”
Experts at the University of Nevada, Las Vegas, will help them identify the remains and determine the age of the barrel’s metal, Lieutenant Spencer said.
Since the victim was killed in the 1980s in an area near Las Vegas, where mob-connected casinos dominated the Strip, investigators will “definitely not rule out” that the killing may have been Mafia-related, Lieutenant Spencer said.
“We are going to look at that potential possibility,” he said.
The barrel was discovered about 3 p.m. on Sunday afternoon by people walking along the shoreline of Lake Mead — America’s largest man-made reservoir, which is about 40 miles east of Las Vegas and was formed by the construction of Hoover Dam.
They saw the corroded, rusted barrel embedded in mud, its beige exterior covered in barnacles, Lieutenant Spencer said. While the sun shined on nearby boaters floating in the water, they peeked their heads inside and discovered a skeleton.
“We were docking our boat to go home and heard a woman scream,” Shawna Hollister, a witness to the discovery, told KLAS-TV in Las Vegas. “My husband walked over and found the body. His shirt and belt were the only thing we could see over his decomposing bones.”
Photos of the barrel obtained by KLAS-TV show it on its side, close to the receding shoreline, with a boat floating in the background.
Witnesses called the National Park Service, which responded and confirmed that the contents inside were in fact human remains, Lieutenant Spencer said. The National Park Service then called the Las Vegas Metropolitan Police Department, which is investigating.
Investigators also plan to scan missing-person cases from the 1980s to search for clues, Lieutenant Spencer added.
The investigation could take years because the police are starting “at square one,” Lieutenant Spencer said.
“In the 1980s, we did not have any of the DNA databases, so there was no DNA collection,” he said.
If investigators are able to recover DNA samples from the remains, it will take extensive genealogy work to determine the person’s identity, Lieutenant Spencer said.
Since 2000, the elevation of Lake Mead has dropped by nearly 150 feet because of “drought and climate change,” according to the Southern Nevada Water Authority.
Recent conditions have resulted in more significant water level declines. On Sunday, the Southern Nevada Water Authority issued mandatory summer water restrictions.
In August, the federal government for the first time declared a water shortage at Lake Mead, triggering cuts in water supply for the region.
Moscow claims oil could hit $300 a barrel
Footage shows civilian evacuations underway in Sumy
Kirll Timoshenko, an advisor to Ukraine’s President Zelenskyy, shared footage on Tuesday of the evacuation of civilians from Sumy.
Sumy, a city in northeast Ukraine, has been the scene of intense attacks in recent days, with an airstrike killing 18 civilians, including two children, overnight.
Oleg Nikolenko, a spokesperson for Ukraine’s Foreign Ministry, said Tuesday that a humanitarian corridor out of Sumy would be open from 10 a.m. to 9 p.m. local time to allow the evacuation of residents and foreign students.
— Chloe Taylor
2 million people have fled Ukraine, UN says
Two million people have fled Ukraine, according to U.N. High Commissioner for Refugees Filippo Grandi.
— Chloe Taylor
Mayor of Irpin says Russians have threatened his life and demanded surrender
Abandoned strollers are pictured under a destroyed bridge as people walked across the collapsed concrete to flee Irpin, a northwest suburb of Kyiv, on March 7, 2022.
Dimitar Dilkoff | AFP | Getty Images
Alexander Markushin, the mayor of Irpin — a town on the outskirts of Kyiv — said Tuesday that Russian forces had contacted him to threaten his life and demand his surrender.
“Yesterday at 17:58, I received a message from the occupiers threatening my life and health,” Markushin said, according to a translation.
He added that the message included demands for “the complete surrender of Irpin.”
“I’m surprised that these monsters still haven’t understood — Irpin doesn’t give up, Irpin doesn’t sell, Irpin fights,” he said.
There has been intense fighting in Irpin over recent days. On Sunday, President Volodymyr Zelenskyy said Russian troops had opened fire on civilians attempting to flee the town, resulting in the deaths of a family of four. “How many such families have died in Ukraine? We will not forgive. We will not forget,” he said.
— Chloe Taylor
Russian state media says new cease-fire will see Ukrainian civilians evacuated to Russia
Smoke rise after shelling by Russian forces in Mariupol, Ukraine, Friday, March 4, 2022.
Evgeniy Maloletka | AP
The Russian military on Tuesday declared a fresh cease-fire in five Ukrainian cities, according to state-run media. But evacuation routes will lead to Russia.
News agency Interfax reported that evacuation routes would take civilians “from Kyiv, Chernihiv, Sumy, Kharkiv, Mariupol to Russia,” citing Russia’s National Defense Control Center.
On Monday, Russian plans for a cease-fire to allow civilian evacuations were rejected as “completely immoral” by Ukrainian officials, after it emerged that the evacuation routes Russia planned to open would lead to Russian or Belarusian territory.
It came after evacuation attempts were halted at the weekend over claims that Russian forces were violating cease-fire agreements by continuing to attack cities and the routes out of them.
In a press briefing on Tuesday, Ukraine’s Deputy Prime Minister Iryna Vereshchuk said Kyiv had agreed an evacuation route out of Sumy to the Ukrainian city of Poltava. The route had been agreed with both Russia and the International Red Cross Committee, she told reporters.
“No other routes were agreed upon,” she said, according to a translation by NBC News. But she added: “We already have information that the Russian side is preparing a violation of this corridor, they prepare manipulations with the routes to make people go in [another] direction.”
On Monday, a U.N. official said civilians must be permitted to evacuate from conflict zones “in the direction they choose.”
— Chloe Taylor
Ukraine official says 18 people, including 2 children, killed in Sumy airstrike
A Russian airstrike on the city of Sumy killed 18 civilians, including two children, on Monday night, a Ukrainian official has said.
Anton Herashchenko, Ukraine’s deputy minister of internal affairs, said in a Telegram post on Tuesday that Russian pilots had “committed another crime against humanity in Sumy” by dropping bombs on residential buildings in Sumy.
“Debris clearing is still ongoing,” he said. “But the fact of the death of 18 civilians has already been established. Including two children.”
Herashchenko said the deaths were also “on the conscience of European politicians … who have not yet made a decision to give us powerful anti-aircraft missiles or close the sky.”
Western countries and the NATO military alliance have ruled out imposing a no-fly zone over Ukraine, arguing that shooting down Russian planes would lead to an escalation of the conflict and greater human suffering.
— Chloe Taylor
Russia using claims about Ukrainian nuclear weapons to justify invasion, UK says
In an intelligence update on Tuesday, the U.K. Ministry of Defense said that since the end of February, there has been “a notable intensification of Russian accusations that Ukraine is developing nuclear or biological weapons.”
“These narratives are long standing but are currently likely being amplified as part of a retrospective justification for Russia’s invasion of Ukraine.”
Russia launched its invasion of Ukraine on Feb. 24.
Last week, Ukrainian Foreign Minister Dmytro Kuleba called Russian claims that Ukraine was developing nuclear weapons a “hallucination.”
“I once again refute this sick fake,” he said on Twitter.
— Chloe Taylor
UN calls for safe passages for civilians fleeing conflict
In a statement on Monday, Martin Griffiths, the U.N.’s under-secretary general for humanitarian affairs, said there were three immediate priorities that needed to be addressed in Ukraine to “lessen the pain and suffering we are all watching unfold in real time.”
Firstly, he said, military operations must take constant care to spare civilians and civilian infrastructure from attacks — this included creating safe passages to allow civilians to leave areas of active hostilities “in the direction they choose.”
On Monday, Ukrainian officials accused Russia of allowing civilians to evacuate only to Russian or Belarusian territory, a move slammed by Ukraine’s government as “completely immoral.”
Griffiths said in his statement that safe passage for humanitarian supplies into conflict zones was also vital. The U.N. also wanted a system of “constant communication” with both Russia and Ukraine, as well as assurances that the delivery of humanitarian aid would be enabled, he said.
— Chloe Taylor
Ukraine says Russian advance has ‘slowed significantly’
As Russia’s invasion of Ukraine enters its thirteenth day, officials in Kyiv have said the pace of the Russian advance has slowed.
The General Staff of the Armed Forces of Ukraine said in a post on Facebook Tuesday that: “The opponent continues the offensive operation, but the pace of promotion of his troops has slowed significantly,” according to a translation.
As of 6 a.m. local time, defensive operations continued across the country, including in the city of Chernihiv, the capital Kyiv and on Ukraine’s southern coast, the post said.
Russian troops were “increasingly violating the rules of international humanitarian law on military conflict,” Ukrainian officials said.
In Kherson and Mykolaiv, which Ukraine said were currently occupied by Moscow’s forces, Russia had set up tactical groups designed to “conduct propaganda work with the local population,” according to Ukrainian officials.
— Chloe Taylor
Russia claims oil could hit $300 a barrel if Western allies target energy
Oil pumping jacks, also known as “nodding donkeys”, are reflected in a puddle as they operate in an oilfield near Almetyevsk, Russia, on Sunday, Aug. 16, 2020.
Andrey Rudakov | Bloomberg via Getty Images
Russian Deputy Prime Minister Alexander Novak has claimed that oil prices could climb beyond $300 a barrel if the West decides to move ahead with full sanctions on its energy exports.
“It is absolutely clear that a rejection of Russian oil would lead to catastrophic consequences for the global market,” Novak said in an address on state television.
“The surge in prices would be unpredictable. It would be $300 per barrel if not more.”
International benchmark Brent crude futures rose 3.5% to trade at $127.61 a barrel on Tuesday morning in London, while U.S. West Texas Intermediate futures jumped 3% to trade at $123.04.
— Sam Meredith
Putin still has strong support in some circles in Russia, says former NATO deputy chief
Rose Gottemoeller, a former deputy secretary general of NATO, said there are signs Russian President Vladimir Putin retains strong support in certain parts of the country.
“There are a number of very strong nationalists in Russia. Apparently they were present in … motorcades outside of the Kremlin yesterday, waving flags, supporting the president,” she told CNBC’s “Squawk Box Asia” on Tuesday.
Some polls also suggest that his popularity in Russia is still growing, she added.
On the other hand, people who are informed or have a stake in this, “like the oligarchs who have investments all over the world and want to keep their wealth” may be growing concerned as international sanctions hit.
“I am not surprised that they are becoming increasingly worried,” Gottemoeller said.
“I don’t think he’s going to lose his grip on power, but perhaps some messages will start to get through to him,” she said.
— Abigail Ng
Ukraine claims it killed another one of Putin’s top generals, other senior Russian Army officers
A man stands on the rubble of a house destroyed by recent shelling during Ukraine-Russia conflict in Kharkiv, Ukraine March 7, 2022.
Oleksandr Lapshyn | Reuters
Ukraine’s defense intelligence agency said that Russian Army Major General Vitaly Gerasimov was killed, and other senior Russian Army officers “were also killed or wounded” in action near the city of Kharkiv.
Gerasimov was identified by the intelligence agency as the chief of staff and first deputy commander of the 41st Combined Arms Army.
The agency, which said Gerasimov had been “liquidated,” claimed that data obtained related to his death near the city in northeast Ukraine “show significant problems with communication” in Russia’s army, “and with the evacuation of their defeated units.”
The post contains embedded audio files purporting to be intercepted communications between Russians discussing Gerasimov’s death.
The reported killing comes days after another deputy commander of the 41st Combined, Gen. Andrei Sukhovetsky, was fatally shot by a Ukrainian sniper.
—Dan Mangan
Dow Jones Rallies As Powell Set To Raise Rates; Oil Prices Surge Above $112 A Barrel
The Dow Jones Industrial Average rallied 250 points Wednesday after Fed Chief Jerome Powell’s prepared comments indicated the Federal Reserve is still set to raise interest rates despite the Russian invasion of Ukraine. Treasury yields rebounded after two days of sharp losses. Energy stocks traded briskly as oil prices, prodded by the Russia/Ukraine conflict, briefly surged above $112 a barrel.
X
After the close Tuesday, Dutch Bros (BROS) and Salesforce (CRM) were among the companies reporting their quarterly results. BROS shares slid 3% early Wednesday, while Salesforce stock jumped nearly 4% in morning trade. Meanwhile, discount chain Dollar Tree (DLTR) reported mixed results early Wednesday, as shares skidded 4% after the open.
Among the Dow Jones leaders, Apple (AAPL) rose 0.7% and Microsoft (MSFT) traded up 0.6% in today’s stock market. UnitedHealth (UNH), a Dow Jones stock to watch, is nearing a new buy point.
Electric-vehicle leader Tesla (TSLA) climbed around 1% Wednesday, looking to rebound from Tuesday’s 0.75% fall.
Amid the volatile, headline-driven market, Commercial Metals (CMC), Northern Oil & Gas (NOG), Palo Alto Networks (PANW) and Ryan Specialty (RYAN) are among Wednesday’s top stocks to watch. Keep in mind that current stock market conditions should keep investors in cash and on the sidelines.
Microsoft and Tesla are IBD Leaderboard stocks. Commercial Metals was featured in this week’s Stocks Near A Buy Zone column. Ryan Specialty is an IPO Leader.
Dow Jones Today: Fed Chief Powell, Russian Invasion
After Wednesday’s market open, the Dow Jones Industrial Average traded up 0.8%, while the S&P 500 rose 0.9%. The Nasdaq ascended 0.65% in morning trade. Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) rose 0.5%, and the SPDR S&P 500 ETF (SPY) advanced 0.6% after Wednesday’s open.
The 10-year Treasury yield ticked up to 1.78% Wednesday morning. On Tuesday, the 10-year Treasury yield closed at 1.71%, after diving for a second straight session. On Feb. 15. the 10-year Treasury yield peaked above 2.06% — its highest level since August 2019. Meanwhile, U.S. oil prices advanced more than 7% Wednesday, reacting to a reluctance among global oil traders to purchase Russian oil. West Texas Intermediate crude briefly traded above $112 a barrel.
Federal Reserve chief Jerome Powell is set to testify before Congress on Wednesday and Thursday at 10 a.m. ET. With inflation already running hot and the Fed so far behind the curve, there’s concern on Wall Street that policymakers may feel little choice to not only plow ahead with rapid tightening, but potentially step up the pace of interest-rate hikes. Fed chief Powell may use his testimony to assuage that concern.
In prepared comments, Powell said, “We will use our policy tools as appropriate to prevent higher inflation from becoming entrenched while promoting a sustainable expansion and a strong labor market. We have phased out our net asset purchases. With inflation well above 2% and a strong labor market, we expect it will be appropriate to raise the target range for the federal funds rate at our meeting later this month.”
In Ukraine, Russian forces continued to heavily bombard the country’s second-largest city, Kharkiv, in a bid to demoralize the defenders in an apparent shift in military strategy.
Meanwhile, ADP said companies added 475,000 jobs in February, better than the Econoday estimate for 320,000 new positions. The ADP Employment report is calculated monthly as a precursor to the nonfarm payrolls from the Labor Department. That report is due out Friday.
Stock Market Correction
The stock market posted weak action Tuesday, as the major stock indexes sold off with heavy losses. Despite the weakness, Wednesday will be Day 5 of the ongoing rally attempt, which means a follow-through day — signaling the start of a new uptrend — is possible anytime now. Amid the current volatility, it’s an important time to read and follow IBD’s The Big Picture column.
Tuesday’s The Big Picture commented, “With more stocks still falling than rising, to be a successful stock picker in the stock market today likely means you’re laser-focused on the handful of sectors that are actually rising amid the broad decline.”
If you’re new to IBD, consider taking a look at its stock trading system and CAN SLIM basics. Recognizing chart patterns is one key to the investment guidelines. IBD offers a broad range of growth stock lists, such as Leaderboard and SwingTrader.
Investors also can create watchlists, find companies nearing a buy point, or develop custom screens at IBD MarketSmith.
Four Dow Jones Stocks To Watch Now
Dow Jones Earnings: Salesforce
Salesforce stock rallied nearly 4% early Wednesday after the company beat Wall Street’s quarterly earnings and sales estimates. The enterprise software maker’s revenue guidance came in above expectations, but its profit outlook missed.
CRM shares closed Tuesday more than 30% off their 52-week high. The stock is far below its 50- and 200-day moving averages.
Dow Jones Stocks To Watch: UnitedHealth
UnitedHealth is building a double-bottom base that offers a 501.03 buy point. Shares ended Tuesday just below their 50-day moving average after a 0.1% gain. UNH stock traded 0.5% higher Wednesday.
Bullishly, the stock’s relative strength line is right at new highs, indicating significant stock market outperformance.
Four Top Growth Stocks To Watch In The Current Stock Market Correction
Stocks To Watch: Commercial Metals, Northern Oil, Palo Alto, Ryan Specialty
Texas-based Commercial Metals — a manufacturer of metal products for the construction industry — is trying to break out past a 38.82 buy point in a consolidation. Shares are about 3% below the entry, as the stock briefly broke out Tuesday. The 5% buy area goes up to 40.76. CMC stock shows a 98 out of a perfect 99 IBD Composite Rating, per IBD Stock Checkup. CMC shares were up 2.5% Wednesday morning.
Northern Oil & Gas is breaking out past a cup-with-handle’s 25.57 buy point, according to IBD MarketSmith chart analysis. NOG shares moved up 3% Wednesday.
Cybersecurity leader Palo Alto Networks is holding above a consolidation’s 572.77 buy point after Tuesday’s nearly 3% decline. The 5% buy area goes up to 601.41. The RS line hit a new high on the breakout day. Last week, the company reported strong earnings and sales. Palo Alto shares were flat early Wednesday.
IPO Leader Ryan Specialty is trying to break out past a 40.65 buy point in a double bottom with handle, but reversed sharply lower Tuesday. Last week, the IPO stock found strong support around its 50-day line. RYAN shares were up 1% Wednesday morning.
Join IBD experts as they analyze leading stocks in the current stock market correction on IBD Live
Tesla Stock
Tesla stock rose about 1% Wednesday morning, looking to rebound from Tuesday’s losses. Shares decisively regained their long-term 200-day line during Monday’s surge. Now look for the stock to continue its move up the right side of a new base. The next key test for the stock could be the 50-day line, which sits about 10% above its current price. A retake of that line would be bullish for the stock’s base-building process, while heavy resistance could signal a longer-term consolidation period.
The stock traded as high as 1,243.49 on Nov. 4, but ended Tuesday about 31% off that all-time high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple is building a double-bottom base with a 176.75 buy point, according to IBD MarketSmith chart analysis. Shares are about 7% away from the new buy point. AAPL stock found support at its long-term 200-day line last week, but remains below its 50-day moving average. Apple shares rose 0.7% Wednesday.
How the Dow Jones stock handles potential resistance at the 50-day line will be key to the likelihood of a breakout. If the stock finds stout resistance, then a more lengthy consolidation period would be likely. However, if the stock decisively regains that level, then a breakout could be on the near horizon. For now, Apple stock is about 5% below the 50-day line, so there is some time before a potential test.
The stock’s relative strength line remains near recent highs in the face of the stock market weakness, signifying that institutions are hesitant to sell their Apple shares.
Software leader Microsoft fell 1.3% Tuesday, snapping a three-day win streak. The Dow Jones software leader is just under the long-term 200-day line, as it continues to build a base. MSFT stock rose 0.6% Wednesday.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
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Oil rises above $100 a barrel for the first time since 2014
Oil prices rose to $102 per barrel, futures pointed to heavy losses for European shares and the rouble fell to a record low after Russia’s president Vladimir Putin launched a military invasion of Ukraine.
Brent crude rose as much as 5.7 per cent, the first time the international benchmark has crossed the $100 threshold since 2014. West Texas Intermediate, the US marker, climbed almost 6 per cent to $97.30.
“If this situation continues to deteriorate I wouldn’t be surprised to see Brent at $120 a barrel, and that is really the point you’d expect to see co-ordinated intervention [by global suppliers],” said Robert Rennie, global head of market strategy at Westpac.
The military action in Ukraine has spurred investors to minimise losses by dumping risky assets in favour of havens.
Futures pointed to heavy losses for European shares, with the Euro Stoxx 50 set to drop almost 4 per cent at the open, while the FTSE 100 was expected to fall more than 2 per cent.
The S&P 500 was set to drop about 2 per cent after closing Wednesday’s session sharply lower. The tech-focused Nasdaq was expected to fall 2.7 per cent, putting the index on track to drop more than 20 per cent from its most recent peak and into a bear market.
In Asia, Hong Kong’s benchmark Hang Seng index dropped more than 3 per cent and Japan’s Topix shed 1.3 per cent on Thursday. Investors said that simultaneous drops in the Tokyo-listed shares of technology group SoftBank, clothing company Fast Retailing and robot maker Fanuc was a signal that investors were panic-selling exchange traded funds that track Japan’s benchmark index.
Investors seeking refuge from share price falls piled into sovereign bond markets, driving down yields. The yield on 10-year US Treasuries fell 0.12 percentage points to 1.877 per cent.
The price of gold rose about 2 per cent higher to more than $1,939 per troy ounce.
As explosions were reported near Kyiv early Thursday morning, the Moscow Exchange announced trading in all markets had been suspended and gave no indication of when it would reopen.
Russian stocks have plunged in response to the crisis. The Moex index had been set to drop more than 11 per cent before the main trading session began on Thursday and has already fallen more than 18 per cent this year.
In currency markets, the military operation sparked a sell-off for the Russian rouble, which sank as much as 10.2 per cent to Rbs89.99 against the dollar, the lowest level on record, according to Bloomberg data. The euro also fell 0.6 per cent against the greenback to $1.1235.
The market moves in Asian trading came after Putin said he had ordered a military operation in Ukraine’s Donbas region that has been condemned by the US and many other European and western governments.
“All responsibility for the possible bloodshed will be fully and completely on the conscience of the ruling regime,” he said in an address broadcast on Russian state television.
Additional reporting by Leo Lewis in Tokyo
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Oil could vault as high as $150 a barrel, veteran analyst warns
Some pumpjacks operate while others stand idle in the Belridge oil field on November 03, 2021 near McKittrick, California.
Mario Tama | Getty Images
Oil prices are soaring and nothing appears to be stopping their ascent. December to January saw international benchmark Brent crude climb by roughly $11 a barrel, and it’s gone up nearly the same amount since the start of February, underpinned by supply concerns, rising inflation and geopolitical tensions.
Brent surpassing $100 a barrel is almost a given at this point, energy analysts say; but now, an increasing number of forecasters predict the commodity surpassing $125 a barrel and even higher.
“Given that you’ve got this underinvestment in capital exploration, we’re running low on physical oil, we’re running short of supply,” John Driscoll, director of JTD Energy Services, told CNBC on Monday. “There is a scenario where we could vault past $120, even as high as $150” a barrel.
Brent crude crossed $95 a barrel in the last week, its highest level since the summer of 2014 and a 63% increase year-on-year. It was trading at $93.98 per barrel on Wednesday at 10:20 a.m. in London.
Tensions over the threat of a Russian invasion into Ukraine have also helped to push prices up, though a partial drawdown of Russian troops from Ukraine’s border areas on Tuesday led the commodity’s price to retreat about 3% from the previous day. While Moscow has rejected the assumption of an impending invasion, NATO leaders and U.S. President Joe Biden insist that the risk of war remains high.
But it’s “not only the geopolitical tailwinds that we’re picking up, but the fundamentals,” Driscoll said.
“The market is in what we call a steep backwardation which gives a premium to any prompt physical available oil. We’re starting to sense that demand is on its way to recovering, and we’re looking at supply shortfalls,” he explained.
Those shortfalls exist both in terms of OPEC+ production — the alliance of OPEC and several non-OPEC countries — pumping oil below the levels it promised to add to markets, and sector underinvestment in the U.S. and other countries in the wake of Covid-19 and governments’ pushes to switch to renewables.
OPEC+ members with quotas were short of their production targets by 700,000 barrels per day in January, with co-leaders of the group Saudi Arabia and Russia also pumping below their quotas, according to S&P Global Platts. This comes despite pledging to gradually unwind record supply cuts.
Investors ‘piling into oil markets’
These aren’t the only signs of a continued bull run for oil: money is pouring into investments in oil-related stocks, and international oil companies are raking in massive profits. As inflation in the U.S. hits its highest rate in decades, analysts recommend energy stocks as smart investments. That inflation, aided by global supply chain issues, isn’t just hitting the prices at the gas pump but is also pushing up costs for oil drillers themselves, particularly in the U.S. shale patch. Oilfield services companies have said they will pass on their increased costs to producers.
“As we increase the consumption, our spare capacity drops down, but you also see other key indicators like money managers, the non-commercials, pensions, piling into oil markets,” Driscoll said. “Stellar results from oil equities (like) BP, Shell, Total hitting recent highs.”
Indeed, the S&P 500 Energy Sector Index is up more than 50% year-on-year.
Driscoll isn’t alone in his bullish call — J.P. Morgan this month forecast oil as “likely to overshoot to $125” per barrel “on widening spare capacity risk premium.”
“Supply misses are rising. Market recognition of strained capacity is also growing,” J.P. Morgan wrote in its Feb. 11 report.
The Energy Information Administration lowered its OPEC capacity estimates by 300,000 barrels per day in February, and the producer group hasn’t shown any indication that it will deviate from its planned quota increases of 400,000 barrels per day in 2022, despite pleas from the U.S. and others to help lower oil prices.
“This underperformance comes at a critical juncture – and in our view, as other global producers falter, the combination of underinvestment within OPEC+ nations and post-pandemic rising oil demand (as highlighted by Kolanovic et. al. here) will dovetail to a potential point of energy crisis,” analysts at J.P. Morgan said.
Until demand destruction
These factors along with continued global recovery from the coronavirus-induced economic crash mean there’s very little in the way of prices continuing to shoot up – something that could trigger an economic recession, energy ministers warned at the Egyps Petroleum Conference in Cairo this week. Analysts at RBC Capital Markets believe the only thing that could reverse the price climb is a crash in demand as the commodity’s price outstrips what buyers can afford.
“We could be early, but the major cornerstone of our thesis over the next year, or longer, assuming the macro economy holds, is that the oil cycle will price higher until it finds a level of demand destruction,” Michael Tran, commodity and digital intelligence strategist at RBC Capital Markets wrote in an analyst note on Monday. “It simply does not get more bullish than that.”
The bank sees oil hitting $115 per barrel or higher this summer.
“Historically, markets led higher by tightening product and crude inventories are difficult to solve absent a demand destruction event or a supply surge, neither of which appears to be on the horizon,” Tran wrote.
U.S. oil prices top $90 a barrel for the first time since 2014
A pump jack at oil well and fracking site situated in cotton field in Shafter. Kern County
Education Images | Universal Images Group | Getty Images
U.S. oil crossed above $90 on Thursday for the first time since 2014 as demand for petroleum products surges while supply remains constrained.
West Texas Intermediate crude futures, the U.S. oil benchmark, gained more than 2% to trade as high as $90.23 per barrel. The last time prices were above the $90 mark was October 2014. International benchmark Brent crude rose 1.7% to trade at $91. Brent topped $90 on Jan. 26.
Oil’s had a blistering rally since falling to record lows in April 2020 — WTI briefly traded in negative territory — as demand has returned but producers have kept supply in check. Geopolitical tensions between Russia and Ukraine as well as in the Middle East have also sent jitters through the market.
WTI is up nearly 20% for the year, building on 2021’s more than 50% gain. As oil prices push higher, a number of Wall Street analysts have forecasted $100 oil.
Oanda’s Ed Moya added that part of Thursday’s push higher is due to cold temperatures and a potential drop in production.
“The oil market is so tight that any shock to production is going to send prices soaring. OPEC+ production is on cruise control with their gradual increase strategy, which means oil seems like it’s going to make a run towards $100 oil pretty soon,” he said.
On Wednesday OPEC and its oil-producing allies, a group known as OPEC+, decided to stick to a previously announced schedule and increase March production by 400,000 barrels per day. The move comes as the group has faced pressure, including from the U.S., to boost output in an effort to alleviate the rapid appreciation in oil prices.
“The market remains bullish on oil prices, as it has since May 2020 when OPEC+ enacted mega cuts to its output bringing oil from negative territory to a quite reasonable jump away from $100 per barrel,” said Louise Dickson, senior oil markets analyst at Rystad Energy.
“The prevailing expectation is that the market, despite some downward blips caused by pandemic demand scares, will continue to trade high on oil as real supply shortages exist both in the short and long-term view,” she added.
Again Capital’s John Kilduff said a drop in the dollar on Thursday contributed to oil’s jump higher. When the dollar advances it makes oil more expensive for foreign buyers.
“Today’s precipitous drop in the U.S. dollar was the catalyst needed to stem the selling that emerged in the aftermath of the OPEC+ meeting and some recent weak economic data,” he said.
Kilduff added that while the $100 mark “appears inevitable,” it “won’t be easy.” He noted that supply is returning to the market, and said that China’s economic struggles could be another headwind.