KUALA LUMPUR, Jan 7 (Bernama) -- Bursa Malaysia’s benchmark index rebounded from earlier losses to close at its intraday high on Wednesday, gaining 0.27 per cent in late trading as buying interest returned to selected heavyweights. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) advanced 4.48 points to 1,676.83 from Tuesday’s close of 1,672.35. The benchmark index opened 0.88 of-a-point lower at 1,671.47 and subsequently hit a low of 1,665.94 during the mid-morning session before gaining momentum toward closing. On the broader market, losers led gainers by 565 to 512, while some 526 counters were unchanged, 1,046 untraded, and 10 suspended. Turnover improved to 2.73 billion units worth RM2.76 billion versus Tuesday’s 2.66 billion units worth RM2.76 billion. Dealers said that investors were cautious following geopolitical developments in Asia.
The OPEC war against the shale producers are heated up as shale producers look to Wall Street for support.
Simply put: Another reason to be bearish on crude prices.
Pioneer Natural Resources Co. announced on Tuesday it was tapping investors for $1.4 billion in fresh equity to help finance an increase this year in spending and production in Texas, where wells are still profitable. The share sale shows capital markets are still willing to back the shale industry as crude trades at the lowest in 11 years.
The move, if followed by other top shale producers, could lead to a shallower drop in U.S. oil production than currently expected, putting further downward pressure on crude prices. On Tuesday, Brent, the global oil benchmark, fell below $35 a barrel for the first time since 2004.
Based on the chart from Bloomberg, the oil production in US peaked at almost 9.7 million barrels a day in April. Since then, it has dropped to 9.3 million barrels as companies tightened their belts to cope with low prices. The U.S. Energy Information Administration, a federal body that tracks supply trends, expects production to drop to 8.8 million on average in 2016.
SUPPORT FROM WALL STREET
In a sign of investors’ appetite to support shale companies, Pioneer increased the size of its offering to 12 million shares from 10.5 million shares within hours of its first announcement. The company said it expected to sell the new shares at $117 apiece, a 6.5 percent discount to Tuesday’s close, raising gross proceeds of $1.4 billion.
Of course, even with the support, not all is rosy for the shale companies.
At current prices, investment bank Tudor Pickering Holt & Co. in Houston estimates that the shale industry will spend $9 billion more than it will earn this year, although the gap could be "partially covered" with asset sales and additional cuts to investment programs.
With this, things may be intensified...with the shale companies relying on Wall Street for support while OPEC is counting on the pain from the low prices to rebalance the oil market.
Definitely not a very good sign for the oil companies with this news....will the oil price goes lower? Will it hurt Ringgit further? Ouch! I'm definitely hoping that things will turn better but I ain't so optimistic about it.
Simply put: Another reason to be bearish on crude prices.
Pioneer Natural Resources Co. announced on Tuesday it was tapping investors for $1.4 billion in fresh equity to help finance an increase this year in spending and production in Texas, where wells are still profitable. The share sale shows capital markets are still willing to back the shale industry as crude trades at the lowest in 11 years.
The move, if followed by other top shale producers, could lead to a shallower drop in U.S. oil production than currently expected, putting further downward pressure on crude prices. On Tuesday, Brent, the global oil benchmark, fell below $35 a barrel for the first time since 2004.
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| US Oil Production seen slowing down slightly but not enough |
Based on the chart from Bloomberg, the oil production in US peaked at almost 9.7 million barrels a day in April. Since then, it has dropped to 9.3 million barrels as companies tightened their belts to cope with low prices. The U.S. Energy Information Administration, a federal body that tracks supply trends, expects production to drop to 8.8 million on average in 2016.
SUPPORT FROM WALL STREET
In a sign of investors’ appetite to support shale companies, Pioneer increased the size of its offering to 12 million shares from 10.5 million shares within hours of its first announcement. The company said it expected to sell the new shares at $117 apiece, a 6.5 percent discount to Tuesday’s close, raising gross proceeds of $1.4 billion.
Of course, even with the support, not all is rosy for the shale companies.
At current prices, investment bank Tudor Pickering Holt & Co. in Houston estimates that the shale industry will spend $9 billion more than it will earn this year, although the gap could be "partially covered" with asset sales and additional cuts to investment programs.
With this, things may be intensified...with the shale companies relying on Wall Street for support while OPEC is counting on the pain from the low prices to rebalance the oil market.
Definitely not a very good sign for the oil companies with this news....will the oil price goes lower? Will it hurt Ringgit further? Ouch! I'm definitely hoping that things will turn better but I ain't so optimistic about it.
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