AAA predicts 2016 gas prices may be even lower than 2015

 

http://www.aol.com/article/2016/01/03/aaa-predicts-2016-gas-prices-may-be-even-lower-than-2015/21291077/?cps=gravity_4816_-3139709744369457305

How low can gas prices go? No one is quite sure, but AAA thinks we might not be there yet.

AAA tracks gas prices around the country. In 2015, it reported the average gas price in the United States was $2.40 per gallon. Now, it is predicting the average for 2016 will fall somewhere between $2.25 and $2.45 per gallon.

The price of oil has fallen below $40 per barrel from more than $100 per barrel as recently as mid-2014. This fall was due to several factors, including the doubling of oil production in the United States over the last six years and the increase in efficiency of cars, which has driven down demand.

CNN Money estimates the drop in gas prices saved drivers in the United States about $540 on average in 2015. That is more than $1000 per household since most households have two drivers.

However, don't bank on having the same savings in 2016. AAA points out oil is always susceptible to political crises and other unexpected price shocks.

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Oil's Year In Review: 2015 Will End On A Down Note

 

http://www.oilandgasinvestor.com/oils-year-review-2015-will-end-down-note-833296#p=full

Oil prices steadied on Dec. 31 but were still headed for a second year of steep declines after a race to pump by Middle East crude producers and U.S. shale oil drillers created an unprecedented global glut that may take through 2016 to clear.

Global oil benchmark Brent and U.S. crude's West Texas Intermediate (WTI) futures were on track finish 2015 down more than 30 percent after another year that showed the helplessness of Saudi Arabia and others in the once-powerful Organization of the Petroleum Exporting Countries (OPEC) to support oil prices.

The U.S. shale industry, meanwhile, surprised the world again with its ability to survive rock-bottom crude prices, churning out more supply than thought, even as the selloff in oil slashed by two-thirds the number of drilling rigs in the country from a year ago.

The United States also took a historic move in repealing a 40-year ban on U.S. crude exports to countries outside Canada, acknowledging the industry's growth.

"You do have to tip your hat to the U.S. shale industry and their ongoing ability to drive down costs and hang in there, albeit by their fingernails," said John Kilduff, a partner at Again Capital, an energy hedge fund in New York. Brent crude was up 30 cents at $36.76 a barrel by 10:13 a.m. EST (1513 GMT), rebounding from a near 11-year low of $36.10 earlier in the session.

For the month, it was down 17 percent and for the year, it fell 36 percent. In 2014, Brent lost 48 percent. WTI rose 13 cents to $36.73 a barrel. It slid 12 percent in December and 31 percent for the year, after a 46 percent loss in 2014. The immediate outlook for oil prices remains bleak. Goldman Sachs has said prices as low as $20 per barrel might be necessary to push enough production out of business and allow a rebalancing of the market.

"We have brimming oil inventories in Europe," Bjarne Schieldrop, chief commodity analyst at SEB in Oslo, said. "And our predictions are that oil inventories in Asia are going to get closer to saturation in the first quarter." Morgan Stanley said in its outlook for next year that "headwinds (are) growing for 2016 oil." The bank cited ongoing increases in available global supplies, despite some cuts by U.S. shale drillers.

"The hope for a rebalancing in 2016 continues to suffer serious setbacks," the bank said.

Industry Pain

Brent prices briefly hit a 2004 bottom below $36 this year, effectively wiping out the gains from a decade-long commodity super-cycle sparked by China's unprecedented energy demand boom. The downturn has caused pain across the energy supply chain, including shippers, private oil drillers and oil-dependent countries from Venezuela and Russia to the Middle East.

Analysts estimate global crude production exceeds demand by anywhere between half a million and 2 million barrels every day. This means that even the most aggressive estimates of expected U.S. production cuts of 500,000 bpd for 2016 would be unlikely to fully rebalance the market.

Oil began falling in mid-2014 as surging output from OPEC, Russia and U.S. shale producers outpaced demand. The downturn accelerated at the end of 2014 after a Saudi-led OPEC decision to keep production high to defend global market share rather than cut output to support prices.

OPEC failed to agree on any production targets at its Dec. 4 meeting in Vienna, cementing its decision to protect market share, as the organization braces for the return of Iranian exports to the market after the lifting of Western sanctions.

Russia and OPEC show no signs of reining in production, leading traders to establish record high active short positions in the market that would profit from further crude price falls.

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S&P 500 turns positive for year; tech stocks rally

Traders work on the floor of the New York Stock Exchange in New York, December 28, 2015.

Reuters/Lucas Jackson

 

http://www.reuters.com/article/us-usa-stocks-idUSKBN0UC0XB20151229

U.S. stock indexes were higher on Tuesday, with the S&P 500 logging a small gain for the year, as tech stocks rallied and energy stocks reflected a recovery in crude prices.

The S&P 500 was up 0.8 percent for the year, while the Nasdaq Composite extended gains and was up 7.59 percent. The Dow Jones industrial average, however, was down about 0.66 percent.

"I think equities on average are destined to end 2015 in uneventful fashion," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis.

"Investors on average are at the crossroads of concern and optimism," he said. Lower oil prices put the pace of global growth in question and could translate to lackluster earnings, he added.

Crude prices edged up as colder weather entered Europe and North America, raising hopes of a short-term uptick in the tepid demand that has plagued the commodity this year.

Exxon shares were up 0.6 percent at $79.22, while Chevron was up 1 percent at $91.28.

At 11:09 a.m. ET (1609 GMT), the Dow Jones industrial average was up 173.77 points, or 0.99 percent, at 17,702.04, the S&P 500 was up 18.73 points, or 0.91 percent, at 2,075.23 and the Nasdaq Composite index was up 56.09 points, or 1.11 percent, at 5,097.08.

All 10 major S&P sectors were higher, led by a 1.16 percent rise in the tech sector.

Apple was up 0.9 percent at $107.78, the biggest influence on the S&P. Amazon was up 1.9 percent at $688 and gave the biggest boost to the Nasdaq.

Data on Tuesday indicated higher consumer sentiment, with the Conference Board's index of consumer confidence for December rising to 96.5, above the 93.8 expected.

Still, the slide in oil prices appear to have dashed hopes of a strong year-end rally, traditionally known as the Santa Claus rally.

Trading volumes are expected to remain thin this week as the year winds down.

Pep Boys was up 8 percent at $18.80 after the auto parts retailer's board found Carl Icahn's latest offer superior to the deal it accepted from Japan's Bridgestone.

Advancing issues outnumbered decliners on the NYSE by 2,062 to 863. On the Nasdaq, 1,883 issues rose and 763 fell.

The S&P 500 index showed 23 new 52-week highs and no new lows, while the Nasdaq recorded 56 new highs and 16 new lows.

(Reporting by Abhiram Nandakumar in Bengaluru; Editing by Don Sebastian)

Wall Street slips on crude on last trading week of the year

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, December 22, 2015.

Reuters/Lucas Jackson

 

Wall Street began the last trading week of the year in the red, dragged down by energy stocks, as oil prices resumed a slide brought on by a global oversupply.
All 10 major S&P 500 sectors were lower, led by the 0.63 percent fall in the energy sector. Exxon's shares were down 1.7 percent at $77.99, while Chevron was down 2.1 percent at $90.12. The stocks were among the biggest drags on the S&P 500 and the Dow.
"The 3 percent dive in crude oil this morning shows you that the sellers are still in control of the energy market and that's leading jitters on Wall Street, coupled with just normal digestive action after last week's strong gains," said Adam Sarhan, chief executive of Sarhan Capital in New York.
All three major indexes posted their best weeks since mid-November last week, rising about 2.5 percent, led by a short-lived surge in energy stocks.
The S&P 500 slipped back into negative territory for the year on Monday, while the Dow was down 1.96 percent. The Nasdaq Composite was up 6.19 percent.
At 9:39 a.m. ET (1439 GMT), the Dow Jones industrial average was down 85.98 points, or 0.49 percent, at 17,466.19, the S&P 500 was down 9.93 points, or 0.48 percent, at 2,051.06 and the Nasdaq Composite index was down 20.08 points, or 0.4 percent, at 5,028.42.
Trading volumes are expected be subdued through the week.
Global stocks ticked lower on Monday over fresh worries about Chinese growth after data showed profits at industrial companies in the world's second-largest economy fell in November for the sixth month in a row.
Valeant was down 4.9 percent at $108.57 after the Canadian drugmaker said Chief Executive Michael Pearson is going on medical leave.
Fitbit was up 4 percent at $30, after reports that the wearable gadget maker's iOS app was the most downloaded after Christmas, suggesting strong holiday demand.
Disney was up 1.1 percent at $107.02, the only Dow component posting gains, after the company's latest Star Wars installment topped $1 billion in ticket sales.
Declining issues outnumbered advancing ones on the NYSE by 2,204 to 533. On the Nasdaq, 1,642 issues fell and 719 advanced.
The S&P 500 index showed no new 52-week highs and no new lows, while the Nasdaq recorded eight new highs and 13 new lows.
(Reporting by Abhiram Nandakumar in Bengaluru; Editing by Don Sebastian)

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