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WTI Collapses To A $40 Handle & What That Means For Earnings, In One Chart
Moments ago, following the DOE report of an unexpected jump in oil inventories which caught all algos by surprise, oil collapsed to a $40 handle...
...a price not seen since 2009.
So what does this mean for S&P 500 earnings in general, and energy earnings in particular?
Nothing short of much more pain, if not a complete wipeout, as the following chart - showing energy EPS with a 4 month lag vs oil prices - from Citigroup reveals.
Which, as we also reported two days ago, means forward energy multiples are about to explode to record highs and, as we also commented, if and when the realization arrives that forward multiples in the 25-30x range are just a "tad high" and multiples mean revert, watch out for a 50% crash in energy stock prices...
... which after a year of hopium courtesy of central banks, will finally metastasize to the rest of the S&P 500.
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Bullish for the consumer just because!
:)
...if only that cost saving was passed on to all the many products of oil..
sorry, broke governments need the revenues...
tick tock motherfuckers!!!
Those who believe charting still matters should go all in on oil.
Ditto
Next major support at $32...
It will dive and test the low $20s by November.
Now for what reason would I go "all in" on a Bearish chart?
I would not even bet the short side.
We are in a state of total financial collapse. Things have not even begun to get interesting...yet.
Oh...But they will. They will get very interesting. Very, very interesting. You can be assured of that.
I can hardly wait for Audience Participation Night...especially when there is NO PHYSICAL OIL OR GASOLINE delivered to the markets to be sold at $20 Oil.
(Hmmmmm...Just how will they transport food to the inner cities? I know. Horseback and Wagon Train.)
These Markets are PAPER MARKETS. Just like the Gold Market...the OIL MARKET IS NO EXCEPTION.
Yes. Things are about to get downright interesting. You have no clue...NONE..about just that which is to slam you on your hind quarters.
Enjoy.
the collapsing price of oil is an attack against the petro dollar and thus the US treasuries
with the lower oil prices, the world will need less petro dollars to buy the same amount of oil, and thusly less petro dollars avalable in the float to buy US treasuries..
If the Saudi's don't watch out, they will get hit with a space-based kinetic weapon just like the Chinese in Tianjin. #NWO
I wonder what the production cost per gallon is? I'm certain that other metrics apply, but I can't imagine that it costs more than $0.50/Gallon.
Arab US T bill and bond fire sell and FED open QE in 5...4...
Don't worry, people will continue to blame the greedy oil companies...
No don't you know it's the speculators! Those damned speculators! Oh...the price is falling...then who will politicians blame? Those damned Arabs! Those damned Russians!
the biggest freakin puzzle to me continues to be Houston. I've already said this...appologize for my broken record...
...but the construction in Houston of Mega Homes (20,000+ Sq ft) is NOT slowing down. High rise high price condo complexes in the galleria...record pace construction. Every damn day in 77024 a home that was built to last in the mid 60's gets mowed down because it's ceilings weren't high enough so they could drop some two story 10k square ft box home on it (with absolutely no personality).
Don't get me wrong...Im not praying for any apocalypse here because it will hurt me like everyone else...it's just, I look around.......and I swear I'm the only dude in 77024 with my financial seat belt on.
That's how it always seems right before a total crisis. See: Skyscraper Index/Curse ;)
https://en.wikipedia.org/wiki/Skyscraper_Index
Have you seen the empty cities in China?
Stupid is as stupid does.
Same in calgary and Edmonton.
The markets are walking into an economic ambush and the surprise will be complete...
Still almost $3.00 a gallon here in Portland, Oregon. Amazing how it shoots up quickly if oil spikes...but if oil falls...NOPE.
State and local governments need the revenues, period.
And the owner of the petrol station needs to support his strip club habit. It is Portland, Oregon afterall!
;)
We haven't had any gas tax hikes here and it's still pushing $3.00 a gallon.
Many states have, however. Moreover, oil goes into many other products. wait for it...
Over $3 here too. At this rate, I think I will see the day where 1 gallon of gas = 1 barrel of oil
Thank you! That made me laugh
$3.51 in Northern Virginia yesterday. SMH
$2.19 at my last fill-up in Western VA
The convenient store on the corner may not be so convenient soon.
$2.65 is the cheapest I have seen in Central Suffolk New York.
Close to $4.00 in San Diego county. nice.
$1.95 10 minutes south of Charlotte this morning and on newly paved interstate. Sounds like y'all need new politicians....
Getting close to $2 here in Texass. Should be under after Labor Day
still over 3 dollars in shitcago something about a BP refinery breaking HAHAHAHAHA
Strongly agreed with Sun Tzu that overall, expect gas prices to finally correct AFTER sunner driving season. Much of it is the special gas formulations for summer. When Priceline had gasoline for sale, this was one factor which really stung gas stations from smart asses as myself who hedged this value correctly. Hell, if Southwest (LUV) can do it, so can the Sheeple.. Right?
Now about those per gallon taxes....
What's really so very cool about this is that 40% of capital spending derives from the oil industry --- see?
40% capital spending and $40 --- that is sooo very kewl!
That's three charts. Maybe it's the new math.
It's time to buy when there's blood in the streets. Go all in oil and Greek bonds!
Unless the oil majors cut dividends, they are fairly attractive here. CVX is paying 5.25% right now. They have a track record of raising dividends for the last 27 years and that was through the previous low price events in 98 and 09. With US production now in decline, at least temporarily, we might see inventories begin to decline. The only way they increased this week was due to record imports.
unless they cut dividends, lulz
who needs to cut divs ? They can just issue new debt to pay divs
Means the S&P will do an about face this afternoon and end green. If it makes sense, do the opposite.
The recession will not be televised
You're going to need a bigger boat...
Crude with a $39 handle tomorrow, Friday or soon should be worth another 500 DJIA points down. See the monthly:
http://www.investing.com/commodities/crude-oil-advanced-chart
Putin to Rosneft CEO
"How can we get the price of oil up"
Rosneft CEO
"Well how about shooting 2 nukes over Iran and hit SA with one and Israel with the other"
Putin
"now that will take everyone's minds off Ukraine and crushing cheese and peaches"
Hey Tylers, I miss the dead cat drawings on the charts.
Gold isn't following oil, and commodities in general, down the rabbit hole today, but is moving in the opposite direction. What's up with that?
No Lightness-Challenged (pardon my PC) Cats on this platform, live or dead. The /CL has lost its bounce...
I am trying to figure out which Travis McGee novel title is more appropriate for the Oil Patch:
"Free Fall in Crimson"
or
"A Purple Place for Dying"
Keep it simple, how about "When fraud is the status quo, possession is the law"
smoke em if you got em.
Yellen has a full tank in the helicopter.
2.18 in Houson
$2.75 here in Ohio due to a BP refinery off line in Indiana-perfect timing as usual!
FWIW, the charts suggest an important bottom here. Perhaps not THE bottom, but at least a significant bounce.
http://pebblewriter.com/oil-bottoms-out/
$40 / BL !!!!!!
Who'da thunk it?
TEXAS is dead! The entire economy will hit bankruptcy.
Shale drilling is Dead. Fracking is dead.
Amazing stuff.
US consumers aren't using the extra money to shop at Walmart.
There is no extra money.
Walmart Stock Slides After EPS Miss, Profits Tumble, Full Year Guidance Slashed Tyler DurdenIt may not rely on such tech bubble (ver 1.0 and 2.0) buzzwords as eyeballs, clicks, “story”, “sharing”, “hyperxxxx, “non-GAAP” and so on, in fact with 2.2 million worldwide employees Wal-Mart is as old-school as it gets, which is why the fact that what was once the world’s most valuable retailer (until Amazon dethroned it a month ago) just reported not only a miss, on tumbling operating earnings, but slashed its guidance by 7%, should be very troubling to anyone who still looks as such trivial things as “fundamentals” and how these reflect the even more trivial “economy.”
Don't fall for the Amazon bullshit either. Wait for FedEX and UPS to report.
FedEx or UPS may not be a good indicator for Amazon. Recently, all of my Amazon purchases have been delivered by USPS. According to my mailman, the postal service has a contract to deliver Amazon packages 7 days a week.
Watch the crude futures traders live tomorrow, trying to buy the $40 handle for a bounce, then watch them cap their losses when futures drill down to the $39 depth:
http://www.investing.com/commodities/crude-oil-advanced-chart
What do they mean by "Handle" in this context?
Do they mean spigot??