The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
CRUDE ON FIRE, BUT IS THE CANDLE BURNING LOW? (1400 EST/1900 GMT)
Oil prices surged beyond $110 per barrel on Wednesday as traders scrambled to seek alternative sources due to supply disruptions after sanctions on Russian banks amid the intensifying Ukraine conflict. Additionally, U.S. crude inventories fell unexpectedly, underscoring the already tight market.
NYMEX crude futures are up nearly 20% for the week, and 45% this year. With this, energy is the best performing major S&P 500 sector in 2022 with a more than 30% advance.
With crude on fire, energy stock strength is hardly seen as a surprise given the sector's very strong positive rolling 10-week correlation with the commodity futures. It currently stands at 0.92 (1.0 being a perfect positive correlation).
On the charts, the futures are trading at 1.88 times the level of their 200-week moving average (WMA):
Using Refinitiv data back to early 1987, the futures have ended a week more than 1.85 times the level of the 200-WMA just 16 times, or less than 1% of the 1,832 weeks over this period.
Additionally, around the time of the first Gulf War, in September 1990, the 200-week disparity briefly spiked to a high of 2.08. In July 2008, during a wild blow-off in crude prices amid a peak oil panic, 200-week disparity topped at 2.07.
Both instances marked major highs for crude. If the disparity were to quickly reach the 2.07/2.08 area again, it could put NYMEX crude just over $120.
Crude has yet to show a bear turn, and it would remain to be seen if the resistance line across the prior major disparity peaks would cap strength. In any event, crude appears to be at a historically stretched level vs the long-term moving average, and therefore it may be especially ripe for a reversal.
Meanwhile, S&P Global is saying that short bets against energy stocks have risen to their highest level in more than a year.
(Terence Gabriel)
I thought you guys were meant to be the clever ones here but can't even do a simple Google search to get an answer. The answer is .... progression of Iranian nuclear talks, so more supply might be coming very soon hence the reluctance of opec+ releasing anymore barrels themselves!
Kign - bp and shell have lots of rns. Except for result day, all their rns is about transactio n of holding which they have to announce each day whilst they doing buy backs. So in terms of relevant communication no difference between the 3 companies. I'm sure hbr would have same amount of rns if they were doing buybacks.
It was my worst investment and I was in denial for ages thinking it'll go back to 25p and I break even. Lost 13k, was so depressed when I left, I put all my savings into llyods when it was 50 2 weeks ago now 53p hoping to get to 60p and I recover my losses.
I hope no one suscribe to the offers. 4p a share, absolutely ridiculous. Probably the worst run company I ever invested. Glad I got out at 7p 2 weeks ago when the they confirmed rumours of fundraising. I'll buy back in when it's 3p lol.
Sorry oil for late reply, like others said total return includes income (ie dividends for bp). You could argue that you can get rent from property but most properties have void periods with no rent coming in for very long time.