November 30, 2014

Saudi’s Dangerous Gambit

Charles Payne

11/29/2014 12:01:00 AM

 

The biggest news for the United States stock market and American consumers happened on Thanksgiving in a far off desert kingdom. Saudi Arabia has taken the big gambit of not cutting production which means downward pressure on oil will continue, and that means less revenue for them. Why would a nation that gets 90% of their revenue from oil allow the price to plunge? I’ve said it several times, but I’m more convinced this is their (last) chance to crush, or at least derail/stall, America’s fracking miracle.
It’s a war without bullets, but make no mistake, it's also about no prisoners. According to the Wall Street Journal, the Eagle Ford Region is the only drilling region still able to be profitable with oil prices at a 4-year low of approximately $69.27 per barrel.

Drilling Region	Breakeven Begins
Permian Basin	$75
Bakken	$75
Eagle Ford	$65
Mississippi Lime	$83
Texas Panhandle	$81
Niobrara	$78
Scoop	$91
Tuscaloosa Marine	$86

In the meantime, this is party time for American consumers as gasoline is poised to get even cheaper.

 Early reports from retail land shows robust foot traffic at malls and shopping centers, but not sure how much people are buying, although it’s clear retailers are getting smarter and smarter about coaxing people to malls in the internet era and getting them to buy stuff.

Please note, due to the shortened trading session, there will not be an afternoon commentary. We hope everyone has a safe and wonderful weekend.