WTI crude oil for November delivery was down 2.01% to $44.78 a barrel Monday morning, and Brent crude oil for November was down 2.14% to $47.56 a barrel.
Despite easing U.S. oil production, output from other counties have kept the global oversupply of crude at more than 1 million barrels a day in the 93 million barrels a day global market, according to the Wall Street Journal.
"With global stock levels at all-time highs and a huge ongoing excess of supply over demand now and through 2016 bullish inclinations need to be reined in," PVM analyst David Hufton told the Journal.
Citigroup lowered its global oil demand growth forecast for 2016 to 2.9% from 3.1% in a note to investors on Monday, which also helped bring down oil prices. The analyst firm had forecast 3.5% growth for 2016 in May.
Concerns about a slowdown in China also helped bring down oil prices, according to the Journal.
Last week Transocean was linked to Petrobras'(PBR) - Get Reportongoing corruption probe. The company denied any involvement in the alleged pay-to-play scheme known as Carwash, saying, "Transocean has not identified any wrongdoing by any employee or any of its agents in connection with the company`s business."
TheStreet Ratings team rates TRANSOCEAN LTD as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
We rate TRANSOCEAN LTD (RIG) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Energy Equipment & Services industry. The net income has significantly decreased by 41.7% when compared to the same quarter one year ago, falling from $587.00 million to $342.00 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Energy Equipment & Services industry and the overall market, TRANSOCEAN LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 60.60%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 42.94% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- TRANSOCEAN LTD's earnings per share declined by 42.9% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, TRANSOCEAN LTD swung to a loss, reporting -$5.25 versus $3.85 in the prior year. This year, the market expects an improvement in earnings ($3.38 versus -$5.25).
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 22.5%. Since the same quarter one year prior, revenues fell by 19.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: RIG