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What is your opinion on oil-related stocks following the weekend events in Venezuela?
• Bullish (refiners, oilfield services, recovering assets)
• Bearish (short-lived rally, crude supply glut, capex vs. revenue)
Click here to take the poll and don’t forget to share your thoughts in the WSB comments section.
Good morning! Here is the latest in trending:
January barometer: The period for the so-called Santa Claus rally is drawing to a close, with today’s session marking the end. Will it be a disappointment for investors?
Turnaround plan? Saks Global is looking to borrow big. The luxury retailer is likely to file for a Chapter bankruptcy in the coming weeks.
Caracas current: More on the latest happenings in Venezuela below, but U.S. airlines have restarted flights in Caribbean, Elon Musk is supplying Starlink, and some multinationals have switched to remote work.
Nicolas Maduro will have his first day in court on Monday following his capture in Venezuela. The seemingly ex-president and his wife are currently being held in a jail in Brooklyn, New York, and are expected to face charges related to drug trafficking, narco-terrorism, and the illegal possession and use of machine guns and destructive devices. Life in prison is the most likely outcome, but markets are already moving on the many impacts of the U.S. ouster of Maduro from power. (25 comments)
On the move: Oil is set to see the most immediate effect, and traders are acting accordingly. Among the biggest gainers in premarket trading are Halliburton (HAL) and SLB (SLB), which are both up 8% at the time of writing. Shares of Chevron (CVX), which has operated in Venezuela under an American exemption, are also ahead by 7%, while ConocoPhillips (COP) and Valero (VLO) advanced 6%. Note that crude prices are largely unchanged, with WTI futures (CL1:COM) trading at around $57 per barrel.
“We built Venezuela’s oil industry with American talent, drive, and skill, and the socialist regime stole it from us, which constituted one of the largest thefts of American property in the history of our country,” President Trump said over the weekend. “We need total access to the oil and to other things in their country that allow us to rebuild their country. We’re going to have our very large United States oil companies – the biggest anywhere in the world – go in, spend billions of dollars, fix the badly broken infrastructure. We’re going to be taking out a tremendous amount of wealth out of the ground… it goes also to the United States of America in the form of reimbursement for the damages caused to us by that country.” Companies must reinvest to recover Venezuela claims
Thought bubble: Nearly a year ago, Seeking Alpha’s Wall Street Breakfast wrote an article on Why The U.S. Cannot Use Its Own Oil. Venezuela has the heavier crude that is processed by most American refineries, compared to the lighter crudes produced in the U.S. that are more suitable for export. While the U.S. is energy secure and is the world’s biggest oil producer, intervention in Venezuela (which has an estimated 303B barrels of oil reserves) could shield it against trade or political disruptions, and give it greater leverage against rival OPEC+ and its member nations. Take the WSB survey.
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Today’s Markets
In Asia, Japan +3%. Hong Kong flat. China +1.4%. India -0.4%.
In Europe, at midday, London +0.1%. Paris +0.1%. Frankfurt +0.8%.
Futures at 6:30, Dow +0.1%. S&P +0.3%. Nasdaq +0.7%. Crude +0.3% to $57.48. Gold +2.2% to $4,424.20. Bitcoin +1.7% to $92,884.
Ten-year Treasury Yield -2 bps to 4.17%.
On The Calendar
See the full earnings calendar on Seeking Alpha, as well as today’s economic calendar.
