You Ain’t Seen Nothing Yet

We have never seen anything quite like this and we may never see anything like it again. A record one day Santa Claus stock market rally capped off one of the worst months in stock market history. A record-breaking 100o point plus up day in the Dow brought oil back up as we run this market on fear or a lot of coffee. The swings have oil basically out of touch with any real market supply and demand fundamentals and instead seem to be swung by the headline of the moment or whether stocks are going to skyrocket or plunge on any given moment.

Yet the break in oil regardless whether it is signaling a recession or a future drop in demand is already causing ramifications for producers and oil companies big and small and the ramifications of these recent crazy moves will no doubt cost us barrels in the New Year.

Oil prices and stocks dipped after a  Reuters report that said that Sinopec, officially known as China Petroleum & Chemical Corp, suspended two top officials for inflicting severe losses in trading, the stock price plunged 6.8 percent in Shanghai and 4 percent lower in Hong Kong.

Shale company problems are also bubbling to the surface. The Houston Chronicle reported that Eagle Ford, shale’s third-largest driller, shows signs of distress. “Sanchez Energy made it through the two-year oil bust that roughly ended in 2016. But now, despite a year of mostly rising crude prices, the Houston oil and gas company is showing signs of distress that in a worst-case scenario could land it in bankruptcy. The latest hit came late Friday when the New York Stock Exchange warned that Sanchez Energy would be delisted if it did not boost its stock above $1 a share within six months, a move that would hurt the company’s access to capital markets. Sanchez’s stock has been trading below $1 a share since mid-November. It closed Monday at 32 cents a share. Sanchez is the third most active operator in the Eagle Ford shale, holding more than 283,000 net acres of leases in the South Texas resource play where its wells produced roughly 179,000 barrels of crude oil and 5.6 billion cubic feet of natural gas in 2017.” 

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