Connect with us

Market Overview

U.S. Shale Boom Presents Same Old Problem for Energy Markets

Published

on

The U.S. shale boom was back in full swing at the end of last year, as rising oil prices lured companies back into production. At some point, U.S. drillers could undermine global efforts to drain the supply glut at a time when petrostates are starting to get their finances in order.

U.S. Crude Output Hits Record

Oil production in the world’s largest economy averaged 10.057 million barrels per day in November, shattering a nearly 50-year record, according to the U.S. Energy Information Administration (EIA). December production declined by 108,000 barrels per day to a pace of 9.949 million, data showed.

The bulk of the gains were attributed to higher output in the shale regions of Texas and North Dakota. The nation’s shale boom began in 2005, around the time the U.S. was staring down at a long-term-term natural gas crisis.

According to Reuters, the November figure outpaced the 10.044 million barrel average in November 1970. At these levels, the United States has officially become the world’s second-largest producer, ahead of Saudi Arabia but behind Russia.

With U.S. crude output at record highs, there is growing concern that the market won’t be able to absorb excess supply without OPEC extending its production cuts. Given the cartel’s reliance on crude exports, that could be a tough sell.

The Organization of the Petroleum Exporting Countries and its allies agreed in November to extend their production cuts through 2018. Gulf countries have achieved record compliance, but petrostates outside the Arab-led cartel have not shown the same commitment. While OPEC countries have cut output by at least as much as promised, Russian compliance has been around 90%, according to data provided by Bloomberg.

Output: It’s Only Going Up from Here

The shale surge sends a strong signal that U.S. production is on its way to 11 million barrels per day sooner than previously expected. That’s because efficient U.S. producers can still cut a profit with barrels priced above $60.

There are other signs that U.S. companies are ramping up production. The number of active oil rigs drilling on U.S. soil is up 224 over the past 12 months, far outpacing the modest 27-unit increase internationally, according to Baker Hughes. At that level, there are more active rigs in the United States than the rest of the world.

U.S. shale has proven itself to be resilient to weaker oil prices, with several companies returning to profitability in the second half of 2016. Market watchers have indicated that $50 a barrel is the cut-off point to profitability for many of America’s shale producers. However, several companies, including Exxon, Shell and Chevron, had a breakeven price of less than $40 a barrel in 2016.

Source: SeekingAlpha.com

Shale’s explosive growth is expected to continue throughout the year, and may even extend beyond 2018, according to International Energy Agency (EIA) executive Faith Birol.  Looking at weekly crude output, it appears that U.S. producers are just getting warmed up. Weekly output is approaching 10.3 million barrels per day, putting it on track for 11 million within the year.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
4 votes, average: 5.00 out of 54 votes, average: 5.00 out of 54 votes, average: 5.00 out of 54 votes, average: 5.00 out of 54 votes, average: 5.00 out of 5 (4 votes, average: 5.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.6 stars on average, based on 612 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




Feedback or Requests?

Market Overview

Market Update: U.S. Stocks Rattled by Trade War; Cryptocurrencies Pull Back from Multi-Week High

Published

on

U.S. stocks declined sharply on Monday, with the Dow and S&P 500 pulling back from record highs on news that China and the United States had cancelled upcoming trade talks. Meanwhile, cryptocurrencies slipped from recent highs on profit-taking.

Stocks Fall

All of Wall Street’s major indexes posted declines on Monday. The S&P 500 Index slipped 0.4% to 2,919.37, with seven of 11 primary sectors finishing in negative territory. Consumer staples were the biggest decliners percentage-wise; industrials and materials also finished firmly lower.

Shares of energy companies bucked the downtrend, rising more than 1% on average, as international crude prices hit four-year highs.

The much narrower Dow Jones Industrial Average declined 181.32 points, or 0.7%, to 26,562.18. The technology-focused Nasdaq Composite Index reversed losses in afternoon trading, rising 0.1% to 7,993.25.

The CBOE VIX, also known as the fear index, rose 5.2% to 12.29. VIX typically rises when stocks fall and vice versa. Levels below 20 generally point to complacent market conditions.

U.S.-China Trade Talks Cancelled

Equity markets were under pressure as new tariffs on U.S. and Chinese goods came into effect. Both countries have also cancelled upcoming trade talks after the Trump administration announced a 10% levy on $200 billion in Chinese goods. In response, Beijing slapped import duties on 5,000 U.S. products and rescinded its proposal to send a trade delegation to China.

The new round of tariffs on Chinese goods came into effect on Monday. The current rate of 10% is set to rise to 25% by year-end if China doesn’t comply with Washington’s demands.

The Trump administration is doubling down on its threats because China cannot match the U.S. dollar for dollar in a trade war. Beijing’s massive surplus with the U.S. gives Washington more leverage in negotiating the new terms of trade.

Cryptocurrencies Stabilize After Sharp Correction

The cryptocurrency market was valued at roughly $220 billion Monday afternoon, well off its most recent high of $230 billion. The sharp pullback affected all major coins, though altcoins were disproportionately impacted.

XRP and XLM, the market’s top performers last week, were each down double digits through the early morning session. By the afternoon, XRP had pared its losses to 7.5% and was trading at $0.524. Meanwhile, Stellar’s XLM was worth $0.264, having declined 5.7% over 24 hours.

Bitcoin stemmed its intraday loss to less than 1% as markets continued to stabilize. The leading digital currency is currently trading around $6,643 for a 52% share of the overall market.

As Hacked reported earlier, a pullback in the market was expected following the rapid gains in altcoins and tokens over the past five days. Although the gains were largely predicated on positive fundamental news, the bulls have yet to make a convincing break higher. This means the status quo of lower for longer is still very much in effect.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
0 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 5 (0 votes, average: 0.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.6 stars on average, based on 612 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




Feedback or Requests?

Continue Reading

Analysis

Stocks Pull Back as China Exits Trade Talks

Published

on

Global stock markets have spent the better part of the day in the red, although the losses are muted, and markets are slightly choppy before Wednesday’s Fed meeting. China pulled out of the scheduled trade talks with the US following last week’s tariff-escalation and that put pressure on risk assets globally. Chinese and Japanese markets were closed today, and that also attributed to the lower than usual liquidity and trading activity.

Dow 30 Index Futures, 4-Hour Chart Analysis

European Central bank President Mario Draghi warned of a “vigorous” pick-up in inflation, which triggered a selloff in the dollar and bonds across the globe, while putting more pressure on risk assets too. The dollar almost regained all of its losses since Draghi’s speech and with the looming fed decision in mind, further choppy and nervous trading is expected in the Greenback, especially following the recent surge in Treasury yields.

Russell 2000, 4-Hour Chart Analysis

The Dow and the S&P 500 both continued to retreat off last week’s record highs, as Friday’s trend resumed, and despite the bounce in the market leading tech giants, the Nasdaq is also lower. On a negative note, small-caps are trading at a 1-month low, as measured by the Russell 2000, which could mean that the US market might be ready to roll over into a correction.

The main European indices are holding on to most of last week’s gains in the meantime, but only the energy segment is clearly positive today, with the help of the strong rally in the price of crude oil.

Dollar and Euro in Focus Before the FED

EUR/USD, 4-Hour Chart Analysis

The EUR/USD pair will see fireworks for sure this week, and although the pair reached the 1.18 level today, it’s still in a zone with strong resistance and bulls still can’t conclude a successful breakout, with the 1.1675 level still being close form a technical perspective. For now, the short-term uptrend is intact, but a quick move below 1.1750 could mark a reversal.

Emerging market currencies are mixed, with the Turkish Lira trading notably higher thanks to the possible release of Pastor Brunson, who has been a major catalyst for the diplomatic troubles between the US and Turkey. The release of the Pastor could stabilize the currency, but another major global risk-off shift could hurt the vulnerable country again, as yields continue to rise globally.

WTI Crude Oil Futures, 4-Hour Chart Analysis

As Saudi Arabia basically ignored Trump’s call for lower oil prices, the recent strength in the commodity culminated in a break-out to new 10 week highs in the WTI contract, which topped the $72 per barrel level for the first time since early July. Natural gas hit $3, and it is on the verge of breaking out to a new 7-month high too, as the whole energy segment is rallying.

Elsewhere in the commodity segment, the Dollar’s choppy price action led to a mixed picture, with copper pulling back slightly from last week’s highs, while gold is still fighting to stay above the $1200 per ounce level as it has been the case for several weeks now.

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
2 votes, average: 4.50 out of 52 votes, average: 4.50 out of 52 votes, average: 4.50 out of 52 votes, average: 4.50 out of 52 votes, average: 4.50 out of 5 (2 votes, average: 4.50 out of 5)
You need to be a registered member to rate this.
Loading...

4.6 stars on average, based on 352 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




Feedback or Requests?

Continue Reading

Market Overview

Switzerland Makes It Easier for Blockchain Companies to Open Bank Accounts

Published

on

Switzerland is making it easier for blockchain startups to access traditional financial services after several projects decided to leave the country over strict banking laws. The new guidelines are part of a wider initiative to help Switzerland maintain its status as the epicenter of cryptocurrency innovation.

SBA Issues New Guidelines

On Friday, the Swiss Bankers Association (SBA) announced new guidelines for financial institutions looking to do business with blockchain startups. The rules will make it easier for banks to service the blockchain ecosystem and for the companies themselves to set up bank accounts in the country.

“We believe that with these guidelines, we’ll be able to establish a basis for discussion between banks and innovative startups, making the dialogue simpler and facilitating the opening of accounts,” SBA strategic adviser Adrian Schatzmann said in a news conference, as quoted by Reuters.

The new measures provide “more clarity not only to banks, but also to startups,” said Oliver Bussmann, head of the Crypto Valley Association.

Although blockchain companies are not barred from opening up Swiss bank accounts, existing regulations make it difficult for them to quality for corporate banking services. Swiss banks have been hesitant to serve the growing sector over fears of violating know-your-customer (KYC) and anti-money laundering (AML) obligations.

Banks are especially concerned over initial coin offerings (ICOs), the controversial crowdfunding system that allows companies to raise millions of dollars by issuing tokens. Several ICOs have raised funds without conducting AML checks on their investors. Banks that service such firms would be at risk of falling out of line with existing AML guidelines.

Switzerland’s fourth largest bank,  Zuercher Kantonalbank (ZKB), has already closed the accounts of more than 20 blockchain firms. According to Reuters, only a small handful of the country’s 250 banks ever allowed blockchain companies to deposit the cash equivalent of their token raises.

Under the new guidelines, banks will have the opportunity to distinguish between blockchain firms that carry out ICOs and those that do not. For token projects, KYC and AML guidelines are still enforced.

Crypto Valley Switzerland

Switzerland quickly emerged as a leading hub for the blockchain industry after a government-sponsored institution launched Crypto Valley, an ecosystem based in Zurich and Zug that incubates new cryptocurrency startups. Hacked shined the spotlight on Crypto Valley last October after several dozen high-profile firms set up shop in the region.  Crypto Valley is now home to roughly 530 blockchain companies.

Despite offering a more liberal environment for cryptocurrency startups, Switzerland clamped down on the market in February by issuing more stringent ICO guidelines. This seems to have triggered a mass exodus of cryptocurrency startups, which have since made their way to Liechtenstein, Gibraltar and Cayman Islands. The new rules categorized ICOs into three separate buckets: payment, utility and asset.

SBA is hoping to stem the outflow of blockchain projects by giving them more avenues to traditional banking services. However, with several countries liberalizing their blockchain laws, it remains to seen whether Crypto Valley can maintain its leadership pace.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
3 votes, average: 4.00 out of 53 votes, average: 4.00 out of 53 votes, average: 4.00 out of 53 votes, average: 4.00 out of 53 votes, average: 4.00 out of 5 (3 votes, average: 4.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.6 stars on average, based on 612 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




Feedback or Requests?

Continue Reading

Recent Comments

Recent Posts

A part of CCN

Hacked.com is Neutral and Unbiased

Hacked.com and its team members have pledged to reject any form of advertisement or sponsorships from 3rd parties. We will always be neutral and we strive towards a fully unbiased view on all topics. Whenever an author has a conflicting interest, that should be clearly stated in the post itself with a disclaimer. If you suspect that one of our team members are biased, please notify me immediately at jonas.borchgrevink(at)hacked.com.

Trending