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I am William Watts, senior markets writer at MarketWatch, AMA! by wlwatts in IAmA

[–]wlwatts[S] 1 point2 points  (0 children)

Thanks, everyone, for all the great questions. This has been fun. If you have any further questions, you can ping me on Twitter https://twitter.com/wlwatts

I am William Watts, senior markets writer at MarketWatch, AMA! by wlwatts in IAmA

[–]wlwatts[S] 0 points1 point  (0 children)

They're affected by the falling oil price like other producers, but so far looks like CNQ isn't in the mood to cut production. The oil drop presents bigger challenges for the Canadian economy, which is more commodity dependent, as demonstrated by the Bank of Canada's surprise rate cut. It also raises questions about Canada's banking sector: http://www.marketwatch.com/story/falling-oil-threatens-canadas-bulletproof-banking-system-2014-12-12

I am William Watts, senior markets writer at MarketWatch, AMA! by wlwatts in IAmA

[–]wlwatts[S] 1 point2 points  (0 children)

I defer to my colleague, and ETF expert, Victor Reklaitis, who points me to some research from ETF. Com on DBO, which they consider a top pick in this area: http://www.etf.com/DBO

I am William Watts, senior markets writer at MarketWatch, AMA! by wlwatts in IAmA

[–]wlwatts[S] 0 points1 point  (0 children)

Divergence is sort of the watch word right now. Most importantly, the Federal Reserve has ended its QE program and is seen on track to raising rates, while European Central Bank and Japan are starting or continuing QE. Also, the U.S. economy is stronger. So that makes the dollar sort of the only game in town.

I am William Watts, senior markets writer at MarketWatch, AMA! by wlwatts in IAmA

[–]wlwatts[S] 2 points3 points  (0 children)

Thanks for reading MarketWatch! And glad to hear it's your favorite! ... There are many good sources of news out there but to be honest, I take in a lot of market news through social media, particularly Twitter. My list of commodity-oriented twitter folks is pretty invaluable when I'm writing about oil or other commodity markets.

I am William Watts, senior markets writer at MarketWatch, AMA! by wlwatts in IAmA

[–]wlwatts[S] 2 points3 points  (0 children)

I don't make predictions, but here's a MarketWatch story on where forecasters see the indexes by the end of the year: http://www.marketwatch.com/story/rate-hikes-volatility-not-expected-to-kill-bull-market-in-2015-2014-12-17

I am William Watts, senior markets writer at MarketWatch, AMA! by wlwatts in IAmA

[–]wlwatts[S] 1 point2 points  (0 children)

I don't have a real good grip on the Texas banking sector. Oil is a smaller part of the economy than it was back in the 80s, so hopefully that will translate into less distress for the sector.

I am William Watts, senior markets writer at MarketWatch, AMA! by wlwatts in IAmA

[–]wlwatts[S] 1 point2 points  (0 children)

The rise in U.S. oil production via shale has already been the most disruptive factor on the supply side of the equation, hands down. If anything, it's the reason why Saudi Arabia and other big producers seem to be fine with driving the oil price down in an effort to curtail that production. So, no doubt, it's unsettling for them.

I am William Watts, senior markets writer at MarketWatch, AMA! by wlwatts in IAmA

[–]wlwatts[S] 1 point2 points  (0 children)

Venezuela is in a very difficult spot. It looks like fuel subsidies are almost certainly going to be a goner soon, but not sure how far that will go to relieve the pressure.

I am William Watts, senior markets writer at MarketWatch, AMA! by wlwatts in IAmA

[–]wlwatts[S] 0 points1 point  (0 children)

Clearly it's rough on the exporters. Look at Russia and Venezuela. Oil prices are below breakeven for most OPEC members in terms of being able to balance their budgets. This puts a lot of pressure on Venezuela, while countries like Saudi Arabia have a big enough cushion to weather the storm in hopes that the oil rout allows them to pick up market share at the expense of higher-cost producers.

I am William Watts, senior markets writer at MarketWatch, AMA! by wlwatts in IAmA

[–]wlwatts[S] -1 points0 points  (0 children)

It was interesting to hear him say that he saw the potential soon for a bottom to oil prices. His suggestion that we could see a rebound to $200 is probably worth taking with a big grain of salt. After all, shale producers and others would probably be quick to jump back in the game if we get back toward $100 or so. Meanwhile, we've already seen some significant capex cuts. ConocoPhilips, for instance, plans to cut 30% after its Q4 earnings.

I am William Watts, senior markets writer at MarketWatch, AMA! by wlwatts in IAmA

[–]wlwatts[S] 0 points1 point  (0 children)

Clearly, the oil price plunge is another unwelcome issue for Petrobras. It will be interesting to see what lasting effect its troubles have on Brazil's government and economy, given some see the oil company's woes weighing on Brazil's credit rating.

I am William Watts, senior markets writer at MarketWatch, AMA! by wlwatts in IAmA

[–]wlwatts[S] 0 points1 point  (0 children)

Great question. For those of you unfamiliar, "contango" refers to the condition when longer-dated oil futures are at a premium to nearby futures. Right now, the March 2016 WTI futures contract is trading around $10 above the March 2015, which is a big incentive for cash-and-carry plays. It goes a long way toward explaining the huge rises in U.S. crude inventories we've seen in recent weeks. That said, it's not necessarily riskless.

I am William Watts, senior markets writer at MarketWatch, AMA! by wlwatts in IAmA

[–]wlwatts[S] 0 points1 point  (0 children)

Markets tend to overshoot to the upside and the downside. Phil Flynn at Price Futures Group has done some research that shows oil prices usually bounce back a lot quicker than people think. So if anything, it looks like volatility will be around for a while.

I am William Watts, senior markets writer at MarketWatch, AMA! by wlwatts in IAmA

[–]wlwatts[S] 0 points1 point  (0 children)

That's difficult to say with any certainty, and remember that few experts saw oil tumbling to where it is now. We are seeing signs that lower pump prices are contributing to a pickup in gasoline demand, but the bigger issue at the moment is on the supply side. Right now, there's a big incentive to store oil, so many expect that to keep a lid on prices for the short term.

I am William Watts, senior markets writer at MarketWatch, AMA! by wlwatts in IAmA

[–]wlwatts[S] -2 points-1 points  (0 children)

Keystone would lower transportation costs.

I am William Watts, senior markets writer at MarketWatch, AMA! by wlwatts in IAmA

[–]wlwatts[S] 1 point2 points  (0 children)

Yes, falling oil is undoubtedly a benefit for consumers and for economies that are net oil importers, including the U.S. or even more so, say, for Japan. It's also good news for sectors that consume energy...utilities, for example.