Crude prices are declining after the International Energy Agency said that there is a record of 3 billion barrels of crude and oil products stockpiled worldwide.
A stubborn global supply glut is responsible for crude prices more than halving over the past year and a half as OPEC has responded to increased U.S. production by maintaining its own production levels.
In today's report, the IEA said that the oversupply could continue into next year.
"The current forecast is for a mild winter in Europe and the U.S. If it turns out to be true, bulging stock levels will add further pressure and oil market bears may choose not to hibernate," the IEA said, according to Reuters.
Industry standard Brent crude for December delivery is down by 0.61% to $43.79 per barrel while West Texas crude for December delivery is down by 2.56% to $40.68 per barrel.
Separately, 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 some concerns, 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 weak operating cash flow and generally disappointing historical performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has decreased to $648.00 million or 26.53% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, TRANSOCEAN LTD has marginally lower results.
- RIG's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 46.46%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. 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.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 31.2%. Since the same quarter one year prior, revenues fell by 29.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- RIG's debt-to-equity ratio of 0.64 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that RIG's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.03 is high and demonstrates strong liquidity.
- You can view the full analysis from the report here: RIG