Bottoms are in fact processes, and a combination of project delays, cap-ex cuts (25% in the E&P sector), and drilling stoppages are moving to provide INCREMENTAL support to oil prices. In any time series we contextualize each new data point on the margin (acceleration or deceleration in the current trend.)
The marginal changes in the table below are very clear with regards to the production outlook for U.S. producers. Of note is that we are showing crude oil production because of the 135 rigs that have come off in the last two weeks, only 19 of those were purely gas-based. The regional data is released monthly while the aggregate data through today is represented in red.
History often rhymes, and we have once again confronted the reality that in a capital intensive world, supply/demand imbalances are not corrected overnight.
While the world was much different in 2008, E&P companies are very sensitive to oil prices under any circumstance. WTI declined 77% from July 3rd , 2008 to December 19th 2008. The oil rig count topped almost exactly 4-months after the July highs on November 7th , 2008 before being cut in half by June of 2009 (6-months after oil bottomed in December).
We haven’t seen quite the rout in WTI, but we expect the TREND of rigs coming offline to continue at least through the first quarter.
While the macro process is signaling the pressure on crude oil remains, we want to call out our incremental absorbtion of an important data point that has remained a central theme in our macro view since moving into QUAD#4. Communicating the process is everything.
WTI is testing the top end of our Immediate-term TRADE range within a BEARISH TREND/TAIL set-up. A model that contextualizes macro across durations provides a check from reversing our process with each new piece of information. Relying on human nature alone to make consistent, clear decisions gets hairy.
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Here's a quick look at some of the top videos, cartoons, market insights and more from Hedgeye this past week.
McCullough: This Is The Uber-Bull Case For Gold
In this excerpt from Wednesday's Morning Macro Call, Hedgeye CEO Keith McCullough responds to a viewer's question about recent moves in gold and outlines what he believes could make the "uber-bull" setup for gold moving forward.
Hedgeye's Morning Macro Call Replay: Is JPM Set Up Worse Now Than 2011?
On a special extended edition of the Morning Macro Call (from Wednesday), Hedgeye CEO Keith McCullough gives his global macro rundown, welcomes in Financials Sector Head Josh Steiner to talk JP Morgan after they missed earnings, and announces Hedgeye's Market Marathon, an all-day live streaming event that will air on January 27.
To sign up for the Market Marathon, visit live.hedgeye.com/market-marathon
McCullough to Underperformers: Stop Whining
In the Q&A portion of Tuesday’s Morning Macro Call, Hedgeye CEO (and Mite Hockey Coach) Keith McCullough discusses the drastic performance divergences in early 2015 and offers his insight for investors who are under-performing early in 2015. Keith also reveals where he has received the most pushback on the 1Q15 Macro Themes and why the bond market is refuting those concerns.
McCullough: Why I'm in No Hurry to Buy Energy Stocks | RTA Live
In this excerpt from Monday’s Real-Time Alerts Live show, Hedgeye CEO Keith McCullough responds to a question about one stock in the energy sector.
Subscribe to Real-Time Alerts for access to the full show, plus all of Keith's signals, #timestamped and sent right to your inbox -http://www.hedgeye.com/pages/individuals#real-time-alerts
RETAIL SALES DECLINE
Retail sales suffered their largest decline in nearly a year, down 0.9% in December.
PASS THE DRAMAMINE
As the new year begins, it's a fair wind for some sectors and a perfect storm for others.
CENTRAL PLANNING, SWISS STYLE!
Editor's note: This is a brief excerpt from Thursday's Morning Newsletter by Hedgeye CEOKeith McCullough.
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While I probably don’t deserve a Ph.D. (or a perma bull II vote) for this, I’ve always said that un-elected central market planners would perpetuate the next crisis. That’s #on this morning – follow the interconnected risk:
WHAT IF JOBLESS CLAIMS (ENERGY STATES) BREAK OUT TO THE UPSIDE?
WILL OIL PRICES DROP BELOW $30 AT ANY POINT THIS YEAR?
We wanted to know what you thought.
Hedgeye CEO Keith McCullough appeared on Opening Bell with Maria Bartiromo this morning to talk volatility, central planning, and deflation. With bond yields plummeting and global tensions rising, Keith thinks that the U.S. jobs market and Europe are now vulnerable as well.
The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.