Apparently, the market is in a mood to go up, even on a relatively quiet day in the world. Other than more fighting in Ukraine, more fighting in Libya, more fighting in Syria, more fighting in Iraq, more fighting in the land of the Kurds, and, more stupid people killing stupid people over ideology in Afghanistan, Nigeria, and Palestine/Israel and outright evil massacres in Mexico, the world is quiet.
So, instead of going down today, as the market drifting lower, as it might when the breathless media is not pushing a negative hard, it is quietly going up. Once again, maybe the market is seeing underneath the hood, the engine that makes the whole dang thing run.
- As of yesterday, with 90% of the S&P 500’s companies having reported last quarter’s results, the S&P 500 is on pace to post a profit of $29.83 per share for Q3. That’s down about a dime from the $29.93 being predicted at the beginning of earnings season, which is nothing. And, that $29.83 is 10.8% stronger than the year-ago figure of $26.92.
It looks as if the market will get yet another solid earnings season, one above the year before. Maybe the market is liking this, in lieu of something not to like, such as the fighting going on in places of the world that produce oil, lots of oil.
It appears the troubles in Libya, Iraq, and Syria are doing nothing to drive speculators back into the oil market, nor are those troubles doing anything to disrupt the oil glut, or the now developing oil-price war.
- Saudi Arabia’s rivals in the shale fields from North Dakota to Texas aren’t flinching as the Persian Gulf kingdom wages a price war to reclaim market share and chill competition.
Yup, I see no reason oil prices will go up until, if, and when the Saudis and other OPEC producers decide to cut production, rather than lowering prices to compete. In fact, it might even be too late to stop the downward trend in oil prices, even if they cut production.
- OPEC is in its own “World Oil Outlook” reported that the demand for its oil in 2017 may hit only 28.2 million barrels per day, the lowest level since the year 2000 a time before the China economic explosion and a time when oil was trading in the $20 and $30 range.
Wow! How cool would that be if oil dropped to that level? Well, it probably won’t, but it would be cool. More likely, oil will drift toward the $70 level in the near future and then from there who knows? In any case, I don’t demand going up in a years or so. Pressure on oil will only increase, demand wise.
The problem that is arising, though, is not with Saudi Arabia; it is with the other OPEC members. The Saudis have enough cash to weather a price drop all the way down into the $50 per barrel range, but the other members are feeling the pinch and will continue to feel the pinch.
- The vast majority of the OPEC producers cannot make their budgets and keep their people happy with prices below $80 a barrel.
Are we seeing the beginning of the end for OPEC?
Trade in the day; invest in your life …
