NEW YORK (TheStreet) -- As the Federal Reserve meeting approaches this Wednesday, low volumes and declining interest rates are leading to surprising correlations among financial markets.
For investors looking to see the negative effects in assets tied to tighter monetary policy, they can continue looking.
Equities are at record highs and investors continue to buy treasuries and sell U.S. dollars. Although it can be said that much of the cut for future bond purchases is already priced in, only commodities look to be acting as if the future holds higher rate.
[Read: Before Buying ConAgra, Read the Label] The first chart below is of SPDR Gold Shares (GLD). The decline in gold prices is partially due to the easing of Western tension over the Syrian conflict. Gold spiked higher as investors feared potential military intervention in the Middle East in late August, which would have led to volatile market trading. What can be seen now is that rates are declining, gold is falling and the dollar is reaching yearly lows. The low volumes leading up to Fed events generally cause correlations to loosen as investors sell particular assets in aggregate and buy up others. Currently equities and bonds are showing strength, as the fear that once existed over stimulus cuts has diminished considerably. Regardless of the fundamental reasons surrounding gold's fall, the fact is that gold has broken a strong upward channel support and has room to fall further. If rates do begin to rise and the dollar catches a bid, expect gold to push toward its July lows. The next chart is of the United States Oil Price (USO). Like the gold chart above, the premium in oil due to the Syrian conflict has largely diminished, which has led to the vast decline in prices over the past few weeks. Although oil and interest rates tend to negatively correlate as well, irregular behavior due to the Fed policy meeting is likewise having adverse affects on this relationship. [Read: Affordable Care Act Reality Check] The difference between gold and oil, however, is that oil prices have yet to break its channel-support range. That is not to say prices won't eventually breakdown, it is just that oil has had relative strength vs. gold recently. If rates do rise because of the Fed decision on Wednesday, look for both commodities above to show weakness and drag down with them other assets, such as equities and bonds. At the time of publication the author had no position in any of the stocks mentioned. Follow @AndrewSachais This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Top Oil Companies For 2014: Apache Corporation(APA)
Apache Corporation, together with its subsidiaries, engages in the exploration, development, and production of natural gas, crude oil, and natural gas liquids. The company has exploration and production interests in the Gulf of Mexico, the Gulf Coast, east Texas, the Permian basin, the Anadarko basin, and the Western Sedimentary basin of Canada; and onshore Egypt, offshore Western Australia, offshore the United Kingdom in the North Sea, and onshore Argentina, as well as on the Chilean side of the island of Tierra del Fuego. Apache Corporation sells its natural gas to local distribution companies, utilities, end-users, integrated oil and gas companies, and marketers; and crude oil to integrated oil companies, marketing and transportation companies, and refiners. As of December 31, 2009, it had total estimated proved reserves of 1,067 million barrels of crude oil, condensate, and natural gas liquids, as well as 7.8 trillion cubic feet of natural gas. The company was founded in 1954 and is based in Houston, Texas.
Advisors' Opinion:- [By Ben Levisohn]
Shares of Devon have gained 5.6% to $63.13 at 3:14 p.m., easily outpacing the likes of Anadarko Petroleum (APC), which has gained just 0.6% to $90.91, Occidental Petroleum (OXY), which is little changed at $97.11, and Apache Corp. (APA), which has advanced 1.2% to $93.10.
- [By Rich Smith]
Since the arrival of "Arab Spring" in Egypt, that nation has been wracked by rising prices for food and fuel, rising unemployment, declines in tourism, and political turmoil. The Egyptian people have been due for some good news for a change, and this week, Apache (NYSE: APA ) brought it to them.
- [By Myles McCabe]
Apache Corporation (APA) is one of the world's largest mid-major oil and gas exploration and production companies. They have a diversified portfolio of energy assets including on-shore, offshore, international, and domestic exposure. Diverse revenue streams protect Apache against volatility in any particular operating segment or region.
- [By Matt DiLallo]
With a recent announcement to buy back up to $2 billion of its own shares, Apache (NYSE: APA ) is just one of the latest companies joining the buyback parade. The company will soon have some extra cash at its disposal as it's planning to unload as much as $4 billion in assets. In essence, what the company is doing is selling the assets it likes least so it can own more of what it likes best.
Top Oil Companies For 2014: ATP Oil And Gas Corp (ATPO.MU)
ATP Oil & Gas Corporation, incorporated in 1991, is engaged in the acquisition, development and production of oil and natural gas properties. As of December 31, 2011, the Company had estimated net proved reserves of 118.9 Million barrels of crude oil equivalent (MMBoe), of which approximately 75.9 MMboe (64%) were in the Gulf of Mexico and 42.9 MMBoe (36%) were in the North Sea. The reserves consisted of 78.6 Million barrels (MMBbls) of oil (66%) and 241.5 billion cubic feet (Bcf) of natural gas (34%). Its proved reserves in the deepwater area of the Gulf of Mexico account for 62% of the Company�� total proved reserves and its proved reserves on the Gulf of Mexico Outer Continental Shelf account for 2% of its total proved reserves. During the year ended December 31, 2011, the Company acquired three licenses in the Mediterranean Sea covering potential natural gas resources in the deepwater off the coast of Israel (East Mediterranean). On August 17, 2012, ATP Oil And Ga s Corp filed for Chapter 11 bankruptcy protection.
The Company�� natural gas reserves are split between the Gulf of Mexico (57%) and the North Sea (43%). Of its total proved reserves, 8.3 MMBoe (7%) were producing, 19.0 MMBoe (16%) were developed and not producing and 91.6 MMBoe (77%) were undeveloped. The Company�� average working interest in its properties at December 31, 2011, was approximately 81%. The Company operates 92% of its platforms. At December 31, 2011, in the Gulf of Mexico, it owned leasehold and other interests in 38 offshore blocks and 49 wells, including 23 subsea wells. The Company operates 43 (88%) of these wells, including 100% of the subsea wells. In the North Sea, it also had interests in 13 blocks and two Company-operated subsea wells. As of March 15, 2011, the Company owned an interest in 13 platforms, including two floating production facilities in the Gulf of Mexico, the ATP Titan at its Telemark Hub and the ATP Innovator at its G omez Hub. It operates the ATP Innovator and the ATP Titan.!
5 Best Undervalued Stocks To Buy For 2014: EQT Corporation(EQT)
EQT Corporation, together with its subsidiaries, operates as an integrated energy company in the United States. It operates in three segments: EQT Production, EQT Midstream, and Distribution. The EQT Production segment engages in the exploration, development, and production of natural gas, natural gas liquids, and crude oil in the Appalachian Basin. This segment?s properties are located primarily in Kentucky, West Virginia, Virginia, and Pennsylvania. As of December 31, 2010, it had 5.2 trillion cubic feet of proved reserves across 3.5 million acres. The EQT Midstream segment provides gathering, processing, transmission, and storage services for the independent third parties in the Appalachian Basin. It has approximately 10,900 miles of gathering lines and 770 miles of transmission lines. The Distribution segment distributes and sells natural gas to residential, commercial, and industrial customers in southwestern Pennsylvania, West Virginia, and eastern Kentucky. It also operates a gathering system in Pennsylvania; and purchases and delivers gas to customers. This segment serves approximately 276,500 customers consisting of 257,900 residential customers, and 18,600 commercial and industrial customers. The company was formerly known as Equitable Resources, Inc. and changed its name to EQT Corporation in February 2009. EQT Corporation was founded in 1925 and is headquartered in Pittsburgh, Pennsylvania.
Advisors' Opinion:- [By Matt DiLallo]
The�Marcellus is well-known for its�low cost of production, which is why many drillers have seen it fuel a recent surge in their stock prices. Marcellus-focused companies like Range Resources (NYSE: RRC ) , Cabot Oil & Gas (NYSE: COG ) , and EQT Resources (NYSE: EQT ) are among those enjoying a nice run so far this year as you can see in the following chart:
- [By Matt DiLallo]
Natural gas has the power to change the face of the fuel industry. In the state we've seen drillers like EQT (NYSE: EQT ) build its own natural gas fuel station, only to find it necessary to expand within 18 months. That's without any help from the government, which gives a bit of an indication as to how powerful the economics of switching has become.
- [By Matt DiLallo]
This is why several of the play's producers, including Range Resources (NYSE: RRC ) and EQT Corp (NYSE: EQT ) , are coming together on a joint industry project to gain better insight into the play. The project, which is expected to last at least a year, will help the companies gain a better fundamental understanding of what rock properties are the most important for good wells. The hope is that the project will enable producers to better target the play in order to earn a return.
- [By Joel South and Taylor Muckerman]
In today's segment, Joel South talks about an intriguing development from EQT Corp. (NYSE: EQT ) and Green Field Services, where the companies drilled a multistage fracked natural gas well in the Marcellus shale using 100% field natural gas. Using natural gas from close wells instead of�diesel�to power rigs could be another game changer as oil and gas companies continue to increase drilling efficiencies and thereby significantly lower costs.���
Top Oil Companies For 2014: Range Resources Corporation(RRC)
Range Resources Corporation, an independent natural gas company, engages in the acquisition, exploration, and development of natural gas properties primarily in the Appalachian and southwestern regions of the United States. The company?s Appalachian region drilling and producing activities include tight-gas, shale, coal bed methane, and conventional natural gas and oil production in Pennsylvania, Virginia, Ohio, and West Virginia. It owns 4,969 net producing wells, approximately 2,750 miles of gas gathering lines, and approximately 1.8 million gross acres under lease. The company?s Southwestern drilling and producing activities cover the Barnett Shale of North Texas, the Permian Basin of West Texas and eastern New Mexico, the East Texas Basin, the Texas Panhandle, and the Anadarko Basin of Western Oklahoma. It owns 1,954 net producing wells, as well as approximately 886,000 gross acres under lease. As of December 31, 2010, Range Resources Corporation had had 4.4 Tcfe of pr oved reserves. It sells gas to utilities, marketing companies, and industrial users. The company was formerly known as Lomak Petroleum, Inc. and changed its name to Range Resources Corporation in 1998. Range Resources Corporation was founded in 1975 and is headquartered in Fort Worth, Texas.
Advisors' Opinion:- [By Tyler Crowe]
With natural gas prices back on the upswing today, those same companies that had written down their assets in 2012 can start to put them back on the books. This is why�Range Resources (NYSE: RRC ) and Cabot Oil & Gas (NYSE: COG ) both have reserve replacement costs below $6.25, one-fifth of the industry average. Both of these companies have very natural gas-heavy portfolios, so as gas prices go back up, they can put these assets back on their books without spending any money on further exploration or acquisitions.
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