Connect with us

Business

Oil’s huge surge in 2022 has completely reversed: Morning Brief

News Agencies

Published

on

This article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

Tuesday, November 29, 2022

Today’s newsletter is by Julie Hyman, anchor and correspondent at Yahoo Finance. Follow Julie on Twitter @juleshyman. Read this and more market news on the go with Yahoo Finance App.

Advertisement

The one trade that dominated most of 2022 has given up almost all of its gains.

Oil touched its lowest level of the year on Monday morning, a victim of concerns over political turmoil in China and a potential hit to demand.

Amid deep losses in both stocks in bonds and a cover-your-eyes plunge in crypto assets, oil prices surged in early 2022.

Advertisement

For oil stocks, the story was — and remains — even better.

Through Monday’s close, the Energy (XLE) sector had gained more than 60% this year, the only one out of 11 sectors in the S&P 500 to be sitting on year-to-date gains greater than 1%. As recently as November 15, XLE closed at a record high.

“Either oil stocks are way overpriced, or oil itself is way underpriced,” Dan Dicker, founder of the Energy Word, told Yahoo Finance last week. For Dicker’s part, he’s in the latter camp, predicting oil will re-attain triple digits by late spring 2023.

Advertisement

Calls for $200-a-barrel oil came fast and furious as WTI crude oil hit multi-year highs in early summer. As of the end of July, the median forecast for WTI crude oil at year-end 2022 stood at $103, according to a Bloomberg survey.

Then came the letdown.

Oil has slumped by more than 30 percent since that June high, as calls for a global recession sparked fear demand would decline as a result. The drop happened even as Saudi Arabia said in October it would cut production.

Advertisement

And further output reductions may be coming.

OPEC+ meets this Sunday to determine its target output level, and oil steadied on Monday after reports the cartel would consider further production cuts. On the flip side, news European Union representatives are meeting next Monday to decide on a price cap for Russian oil added to the recent stream of negative headlines for oil.

Advertisement

For consumers, of course, much of this comes as welcome news, with the drop in oil feeding through to falling gasoline prices at the pump in the U.S., which have hit their lowest since February, according to GasBuddy data. The firm’s head of petroleum analysis, Patrick de Haan, predicted Monday the average cost per gallon could drop below $3 by Christmas.

A pump jack operates in the Permian Basin oil production area near Wink, Texas U.S. August 22, 2018. Picture taken August 22, 2018. REUTERS/Nick Oxford

A pump jack operates in the Permian Basin oil production area near Wink, Texas U.S. August 22, 2018. Picture taken August 22, 2018. REUTERS/Nick Oxford

Money managers have also been trimming bullish oil bets, according to data from the Commodity Futures Trading Commission. Traders cut net-long positions in ICE Brent crude by the most since early March — the sixth-largest reduction since 2011, when the CFTC started releasing the data.

Still, fund managers are overweight energy stocks for the eighteenth straight month, the longest streak since 2012, according to Bank of America’s latest report. Investors surveyed were net 22 percent overweight energy in November, according to the firm.

Advertisement

Stephen Schork, longtime oil analyst and author of the Schork Report, says that, at the very least, there’s more volatility to come between now and the end of the year.

Between China pressures, potential OPEC changes, and year-end tax effects in Houston which could also trigger swings in oil, Schork sees recent volatility as part of a bottoming process.

“Short of a major economic contraction,” Schork told Yahoo Finance, “I do think we’re plumbing the bottom of the market right now.”

Advertisement

What to Watch Today

Economy

  • 9:00 a.m. ET: FHFA Housing Pricing Index, September (-1.2% expected, -0.7% during prior month)

  • 9:00 a.m. ET: House Price Purchasing Index, Q3 (4.0% during prior quarter)

  • 9:00 a.m. ET: S&P CoreLogic Case-Shiller 20-City Composite, month-over-month, September (-1.20% expected, -1.32% during prior month)

  • 9:00 a.m. ET: S&P CoreLogic Case-Shiller 20-City Composite, year-over-year, September (10.45% expected, 13.08% during prior month)

  • 9:00 a.m. ET: S&P CoreLogic Case-Shiller U.S. National Home Price Index (12.99% during prior month)

  • 10:00 a.m. ET: Conference Board Consumer Confidence, November (100.0 expected, 102.5 during prior month)

Earnings

  • Baozun (BZUN), Bilibili (BILI), Compass Minerals (CMP), CrowdStrike (CRWD), Hewlett Packard Enterprise (HPE), Hibbett (HIBB), Intuit (INTU), NetApp (NTAP), Workday (WDAY)

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Advertisement

Read the latest financial and business news from Yahoo Finance

Download the Yahoo Finance app for Apple or Android

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and YouTube

Advertisement
Continue Reading
Advertisement

Advertisement

Breaking News

Editor Pick’s

Latest Entertainment

Entertainment3 hours ago

The Fabelmans star Gabriel LaBelle opens up on ‘secretive’ audition to play young version of director Steven Spielberg

To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video The Fabelmans...

Entertainment8 hours ago

Games Inbox: If PlayStation had no more new games this year, The Last Of Us ending, and Resident Evil 9

Spider-Man 2 – what if it’s all there is? (pic: Sony) The Thursday letters page wonders if Nintendo is avoiding...

Entertainment8 hours ago

KISS’s Paul Stanley on painting, facepainting and why he switched to ‘Bandit’ makeup for one month in 1974

When KISS guitarist/frontman Paul Stanley began painting in 2001, he never expected anyone to even see, let alone purchase, his...

Entertainment8 hours ago

Avatar: The Way of Water splashes Spider-Man: No Way Home in box office charts as it nears $2bn gross

Avatar: The Way of the Water is passing milestone after milestone on its quest for box office dominance. As of...

Entertainment9 hours ago

Julian Sands, ‘A Room With a View’ star, reported missing after hiking in California

British actor Julian Sands at the 76th Venice Film Festival for his film The Painted Bird. (Photo: Reuters) Julian Sands,...

Entertainment9 hours ago

Anne Heche said Ellen DeGeneres was the ‘first and only woman that I ever fell in love with’: memoir

Anne Heche, who died in August, wrote about her romance with Ellen DeGeneres in her new memoir. (Photo: Reuters) Anne...

Entertainment9 hours ago

Gigi Hadid’s latest fashion shoot takes her to new heights on New York construction site

Model Gigi Hadid is seen on the set of a Maybelline commercial in Hudson Yards, New York (GC Images) Gigi...

Entertainment9 hours ago

Mimi Webb isn’t surprised over Brit Award nomination – she manifested it

Mimi Webb is nominated for best new artist at this year’s Brit Awards (Picture: Splash) Mimi Webb isn’t the least...

Advertisement

Latest Sports

Sports35 mins ago

NFL betting: Sportsbooks are praying Patrick Mahomes doesn’t win Super Bowl MVP

Nearly half of all the money wagered on Super Bowl MVP is riding on the Chiefs quarterback.

Sports1 hour ago

What makes Cowboys vs 49ers such an intriguing matchup? | You Pod to Win the Game

Yahoo Sports Charles Robinson, Jori Epstein and Charles McDonald discuss the NFC divisional round clash between Dallas and San Francisco....

Sports2 hours ago

LeBron James and Lakers lose another close game as late mistakes costly versus Kings

LeBron James led the way with 32 points, but familiar defensive and offensive mistakes cost the Lakers in a 116-111...

Sports2 hours ago

Old mistakes hurt Lakers down the stretch in tight loss to Kings

LeBron James led with 32 points, but familiar defensive and offensive mistakes cost the Lakers in the 116-111 loss to...

Sports2 hours ago

Which first-timers will break All-Star gridlock?

With a lot of established stars in the league, it isn’t easy attaining All-Star status. That said, these players have...

Sports3 hours ago

Sources: Resolution talks in NCAA’s case vs. Michigan hit impasse over Jim Harbaugh’s refusal to say he lied

The battle lines are drawn. Harbaugh is not expected to back down and would likely mount a ferocious defense against...

Sports3 hours ago

Ex-Chiefs kicker Morten Andersen had a funny reaction to Cowboys’ extra-point troubles

The former Chiefs kicker couldn’t help commenting on the four extra-point misses by the Cowboys’ Brett Maher.

Sports4 hours ago

Missouri defeats Arkansas 79-76 in foul fest

The No. 25 Razorbacks found themselves in a familiar position Wednesday night, leading their opponent by 10 points in the...

Technology Hot News

Technology5 hours ago

Led by "Amazon" and "Microsoft" .. the technology giants are planning to lay off 64,000 employees

After 10 years of driving the stock market bull run, big tech companies are racing to downsize staff to adapt...

Technology17 hours ago

Apple introduces MacBooks with new M2 processors

Yesterday, Tuesday, Apple unveiled MacBooks powered by the new, faster “M2 Pro” and “M2 Max” processor chips, in a surprise...

Technology24 hours ago

All you need to know about the upcoming Galaxy S23 phones from Samsung

Samsung has officially announced that the (Galaxy Unpacked 2023) event will be held this year on Wednesday, February 1, which...

Technology1 day ago

FTX Exchange Announces Hacking and Stolen $415 Million in Cryptocurrency

Bankrupt American cryptocurrency firm FTX announced today, Wednesday, that $415 million in cryptocurrency has been hacked and stolen from the...

Technology1 day ago

Because of a "fraudulent tweet"… Elon Musk's trial begins

Elon Musk's trial began Tuesday in San Francisco with the selection of jury members who will have to decide whether...

Technology2 days ago

An electric spoon replaces salt and spices, but with conditions

Experts have developed an electric spoon that is able to replace spices and flavors and affect the taste buds in...

Technology4 days ago

The biggest dangers of using tracking devices.. so you can escape?

If you spot an unknown Bluetooth tagging device, there are ways to disable the device so it can't track your...

Technology4 days ago

New Twitter.. For You tab to web version

The Twitter platform announced that it will bring the new tab (For You), which launched last Tuesday for iPhones and...

Advertisement