61.96 -0.24 (-0.39%)
Pre-Market: 8:26AM EDT
|Bid||61.91 x 3000|
|Ask||62.25 x 1200|
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Top news and what to watch in the markets on Wednesday, September 18, 2019.
The loss of production capacity following weekend attacks on Saudi Arabian oil production facilities and increasing tensions in the region highlighted the outsized impact the kingdom's oil supply has on China, which is already facing worries of economic sluggishness. China is the world's second-largest importer of oil from Saudi Arabia, having last year bought just under $30 billion worth of crude from the kingdom. The good news for China is that Saudi Arabia is only its second-largest supplier of crude oil.
The price of oil surged the most on record Monday after a drone attack on Saudi Arabia's oil infrastructure crippled its resources. Saudi Arabia said Tuesday it is close to bringing back online 70% of the 5.7 million barrels per day of oil impacted.
An attack on Saudi Arabian oil fields has removed about 5% of global oil supplies. As a result, oil prices have jumped. It sounds scary for oil and stock investors, but for the time being, the chart tells a different story.
Oil prices are exploding higher on the day, with crude oil up 13% from its close on Friday. That obviously made big headlines in the stock market today, but it's not propelling energy stocks higher in the manner that many had expected.By now, many of you have likely read about the background story. For those that haven't, this is the short-but-sweet scoop. A drone strike rattled Saudi Arabia over the weekend, forcing the country to cut its oil production in half.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe move is equivalent to about 5 million barrels per day, or roughly 5% of the world's daily production.Here's where things get tricky though. Reports say that the production cut is mostly a precautionary measure and that most of that output should be back online within 48 hours.At first, many believed the attack was carried about Yemen's Houthi rebels. Now it is alleged that Iran is behind the attack, which would significantly ratchet up tensions in the Middle East and potentially implicate a response from other nations outside of it (including the United States). Oil's Big ImplicationsNow you know the backstory on why oil prices are surging. But the implications are incredibly far reaching. * 7 Tech Stocks You Should Avoid Now First, where can oil prices go? Let's keep one thing in mind: Oil prices are back to where they were in June. We're still notably away from the April highs and down significantly year-over-year. So while some may suggest that there's enough supply in the market to keep a lid on oil prices, the charts suggest there could easily be more upside.Impacting supply is a few different factors. The first, can Saudi Arabia actually get a majority of production back online in as little as two days, or is it a save-face move ahead of the eventual Saudi Aramco IPO? Second, will the U.S. and other oil-rich nations make up the difference? While 5 million barrels per day is admittedly a lot of oil, between the rest of the Organization of Petroleum Exporting Countries and the U.S., it seems like most of this deficit could be covered.Will President Donald Trump help eradicate a shortage in supply? He seems eager to, tweeting about tapping into the country's strategic oil reserves and fast-tracking pipeline permits. Lastly, will conflicts be ongoing and will tensions remain high in the Middle East? If the answer is yes, then not only are future supply disruptions possible, but energy investors will price in a risk premium to the oil market.Should we see a big spike in oil prices that sustains for months on end, that may have negative implications going into the fourth quarter and holiday seasons. The last thing consumers need -- both here in the U.S. and globally -- is a substantial rise in gas prices that persists into 2020.Finally, a bulk of Saudi Arabia's production goes to Asia. What implications could that have on China's economy, which is already feeling pressure from the trade war? Energy Stocks Make Big MovesSo far, the spike in oil has had a hit-and-miss impact on the energy sector. The Energy Select Sector SPDR Fund (NYSEARCA:XLE) climbed "just" 3.4% on the day. However, the VanEck Vectors Oil Services ETF (NYSEARCA:OIH) jumped 8.6% in the stock market today.Exxon Mobil (NYSE:XOM), which makes up 23% of the XLE, climbed a lackluster 1.5% on the day. Chevron (NYSE:CVX) makes up 22% of the ETF and jumped just over 2%. It's becoming clear why the XLE showed such little life on the day now.Others were more pronounced, though. Schlumberger (NYSE:SLB) jumped 5.3%, while Halliburton (NYSE:HAL) climbed almost 11% on the day. These are the top two holdings in the OIH, by the way.Occidental Petroleum (NYSE:OXY), BP (NYSE:BP) and Pioneer Natural Resources (NYSE:PXD) climbed 6%, 3.9% and 6.5%, respectively.Let's see if we can get more follow through in energy stocks this week, and what oil prices do over the next few days and weeks. Movers in the Stock Market TodayIt wasn't just energy stocks posting big moves on the day. General Motors (NYSE:GM) fell more than 4% after the United Automobile Workers, comprising 50,000 members, went on a nation-wide strike. It impacts 33 production plants and 22 warehouse facilities. JPMorgan analyst Adam Jonas said it will cost GM 3 cents in earnings per share per day, but that proper inventory management and pricing changes can help offset those losses. He likes GM as a buy-the-dip candidate.Despite winning the streaming rights for the renowned hit "Seinfeld," Netflix (NASDAQ:NFLX) shares were flat on the day. While some may question who wants to watch such an old show, just remember that "Friends" is one of Netflix's top shows. It will lose "Friends" in 2020, along with its other top performer, "The Office"). Unfortunately though, the five-year "Seinfeld" deal won't start until 2021.Shares of MGM Resorts International (NYSE:MGM) were up 2.1% after reports surfaced that Blackstone (NYSE:BX) is in talks to buy the Bellagio and MGM Grand. However, those discussion appear to be ongoing, as no deal has been reached yet (or may be reached at all, for that matter).Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Recession-Resistant Services Stocks to Buy * 7 Hot Penny Stocks to Consider Now * 7 Tech Stocks You Should Avoid Now The post Stock Market Today: Crude Oil Rockets; Now What? appeared first on InvestorPlace.
Oil ETFs surged upwards of 10 percent Monday after attacks on Saudi oil production facilities Saturday knocked out 5.7 million barrels of daily production.
Energy stocks were broadly and in many cases sharply higher in premarket trading Monday, boosted by the spike in oil prices after the weekend attack on Saudi Aramco's Abqaiq oil processing plant. The SPDR Energy Select Sector ETF surged 4.2%, with all 28 equity components trading higher ahead of the open. Among the more active components, shares of Schlumberger Ltd. rallied 5.6%, Exxon Mobil Corp. gained 3.3%, Halliburton Co. advanced 5.3%, Occidental Petroleum Corp. ran up 4.9%, TechnipFMC PLC hiked up 3.3% and Chevron Corp. tacked on 3.1%. Elsewhere, Marathon Oil Corp. shares soared 10.4% and Chesapeake Energy Corp.'s stock shot up 15.2%. October crude oil futures jumped 8.2% to $59.37, while futures for the S&P 500 slumped 0.4%.
Investors will turn their attention to Washington this week, as the Federal Open Market Committee gears up for its two-day meeting and representatives from big tech companies head to Capitol Hill to testify.
Saudi Aramco has had to cut production by as much as 5 million barrels a day after the Houthi rebel group in Yemen led a drone attack on the the biggest crude-processing plant. The shutdown amounts to ...
While the rest of the market was stuck in sideways action, energy sector-related exchange traded funds led the charge Monday on rising oil prices in response to Saudi Arabia energy minister’s confirmation ...
Energy sector ETFs surged Thursday after a surprise drawdown in oil inventories and hopes of progress in trade talks between the U.S. and China helped fuel risk-on sentiment in one of the most downtrodden ...
The Utilities Select Sector SPDR (XLU) , the largest utilities sector ETF, and rival utilities ETFs are often embraced by income investors due to above-average yields. Indeed, XLU currently has a dividend yield of 3.07%, which is well above what investors will find on 10-year Treasuries or the S&P 500. While XLU's dividend yield is certainly attractive in a world of low yields, its yield is below the 3.35% offered by the Energy Select Sector SPDR (XLE) , the largest equity-based energy ETF.
Energy ETFs were among the hardest hit Friday after China revealed its intent to raise tariffs on U.S. goods and particularly singled out crude oil imports. Among the hardest hit ETFs on Friday, the Invesco ...
The Energy Select Sector SPDR (XLE) , the largest equity-based energy ETF, is lower by more than 7% this month and its year-to-date gain is close to evaporating, but some market observers believe battered energy stocks are ready to turn higher. XLE’s recent woes have the ETF trading below its 50- and 200-day moving averages, giving short-term traders little reason to approach the fund from the long side. The trade war with China is intensifying pressure on oil prices and energy stocks, and some analysts believe oil supplies are trending higher.
David Bahnsen of The Bahnsen Group joins Yahoo Finance's Scott Gamm on the floor of the New York Stock Exchange to discuss market volatility, U.S.-China trade tensions, and global slowdown concerns.
Yahoo Finance's Alexis Christoforous, Brian Sozzi and Jared Blikre discuss what's moving the markets with Kathy Jones, Chief Fixed Income Strategist at Charles Schwab around Tuesday's opening bell.