• Category Archives Energy
  • Huge Crude Stakes

    This is a syndicated repost courtesy of Alhambra Investments. To view original, click here. Reposted with permission.
    There is a titanic struggle going on right now in the oil market. On the one side of the futures market are the usual pace setters, the money managers. Last week, the latest COT data available, they went the most net long since March. If it continues, it will close in on the most positive futures position since the record long they established back in February.
    Normally that would be insanely bullish for oil prices. But just as in February/March another part of the futures market has intervened on the other side. Back then it was the oil producers who rising inventory forced into a larger and larger offsetting net short (hedge).
    This time, however, it is the swap dealers who are short for reasons that aren’t really clear. The weekly COT report for the last week in October showed a record net short for dealers, just beating their most extreme position from the middle of 2013 at -424k contracts. In the first week and November, they blew away that record at -470k.

    This post was published at Wall Street Examiner by Jeffrey P. Snider ‘ November 16, 2017.


  • Solid Sales Growth and Margins at New Highs Drive 3Q17 Results

    Summary: For the third quarter (3Q17), S&P earnings rose 12% yoy, sales grew 6% and profit margins expanded to new all-time highs.
    These strong results are not due to the rebound in oil prices. Sales for the sectors with the highest weighting in the S&P have grown an average of 7% in the past year and 19% in the past 3 years. Moreover, margins outside of energy have expanded to a new high of 10.8%.
    Bearish pundits continue to repeat several misconceptions: that “operating earnings” are deviating more than usual from GAAP measurements; that share reductions (buybacks) are behind most EPS growth; and that equity gains are unreasonably out of proportion to earnings growth. None of these are correct. Continued growth in employment, wages, and consumption tell us that corporate financial results should be improving, as they have in fact done.
    Where critics have a valid point is valuation: even excluding energy, the S&P is now more highly valued than anytime outside of the late 1990s technology bubble. With economic growth of 4-5% (nominal) and margins already at new highs, it will take excessive bullishness among investors to propel S&P price appreciation at a significantly faster rate. At this point, lower valuations are a notable risk to equity returns.
    92% of the companies in the S&P 500 have released their 3Q17 financial reports. The headline numbers are good. Overall sales are 6% higher than a year ago, the second best growth rate in nearly 6 years. Earnings (GAAP-basis) are 12% higher than a year ago. Profit margins are at a new high of 10.2%, exceeding the prior peak from 2014.

    This post was published at FinancialSense on 11/16/2017.


  • Venezuela Signs $3.2 Billion Debt Restructuring Deal With Russia

    As Venezuela teeters right on the brink of complete financial collapse, Bloomberg reports that Russia has agreed to restructure roughly $3.2 billion in outstanding obligations. While details of the restructuring agreement are scarce, both sides reported that the deal spreads payments out over 10 years with minimal cash service required over the next six years.
    Russia signed an agreement to restructure $3.15 billion of debt owed by Venezuela, throwing a lifeline to a crisis-wracked ally that’s struggling to repay creditors.
    The deal spreads the loan payments out over a decade, with ‘minimal’ payments over the first six years, the Russian Finance Ministry said in a statement. The pact doesn’t cover obligations of state oil company Petroleos de Venezuela SA to its Russian counterpart Rosneft PJSC, however.

    This post was published at Zero Hedge on Nov 15, 2017.


  • Russia’s Alleged Meddling In Catalan Vote: Playing The Blame Game

    Marine Corps veteran Tommy Waller, director of special projects at the Center for Security Policy, has warned President Trump about the EMP threat facing the United States.
    “Winston Churchill once said, ‘History will be kind to me for I intend to write it’…
    The surest way for history to be kind to President Trump is for him to write it, by being the first leader to truly address the existential threat of EMP.
    The first and foremost thing he must write is an Executive Order establishing his own EMP Commission in the White House – a task force that draws from the experience of the previous EMP Commission.”
    The grim warning is directed at North Korea and their ambitions to unleash a devastating atmospheric nuclear explosion above the United States that would collapse the nation’s power grid.

    This post was published at Zero Hedge on Nov 15, 2017.


  • The White House Is Being Warned: North Korea Is Planning A “Devatstaing EMP Attack” On America

    Marine Corps veteran Tommy Waller, director of special projects at the Center for Security Policy, has warned President Trump about the EMP threat facing the United States.
    “Winston Churchill once said, ‘History will be kind to me for I intend to write it’…
    The surest way for history to be kind to President Trump is for him to write it, by being the first leader to truly address the existential threat of EMP.
    The first and foremost thing he must write is an Executive Order establishing his own EMP Commission in the White House – a task force that draws from the experience of the previous EMP Commission.”
    The grim warning is directed at North Korea and their ambitions to unleash a devastating atmospheric nuclear explosion above the United States that would collapse the nation’s power grid.

    This post was published at Zero Hedge on Nov 15, 2017.


  • IEA Pours Cold Water On OPEC Optimism, Warns Global Oil Demand Shrinking

    Pouring cold water on yesterday’s optimistic demand forecast projected by OPEC, which projected global crude demand growth to rise by 1.5mm b/d in 2018, this morning the International Energy Agency warned that the crude oil price rally could be short-lived because, contrary to OPEC’s expectations, global oil demand will be weaker than expected this year and next. In its closely watched monthly oil report, the IEA cut its crude demand growth outlook by 100,000 barrels a day for 2017 and 2018, as the WSJ reported. The agency now expects demand to grow by 1.5 million barrels a day this year and 1.3 million barrels a day next year.
    The IEA predicted that balances will likely show the crude market is oversupplied in Q4 2017 and the first half of 2018, with oil demand in 2017 at 97.7mmb/d, rising to 98.9 million in 2018. Meanwhile, non-OPEC Oil Supply is expected To rise by 700,000b/d In 2017 To 58.1mmb/d, and another 1.4 mmb/d in 2018 to 59.5mm b/d, led by shale output.
    The IEA also noted that global oil inventories fell 63mm barrels In Q3, only second quarterly draw since 2014, with the call on OPEC crude seen at 32.6mmb/d in Q4, declining to 32.0mmb/d in Q1 2018.

    This post was published at Zero Hedge on Nov 14, 2017.


  • Technical Scoop – Weekend Update Nov 12

    Weekly Update
    ‘Buy when it snows, sell when it goes’
    – old stock market proverb
    November traditionally marks the start of the best six months of the year for stock markets. At least, that is what the record shows. The Dow Jones Industrials (DJI) has since 1950 had an average gain of 0.6% from May to October vs. an average gain of 7.5% from November to April. The period November to May has had over three times as many up periods as it has had down periods vs. the period from May to October which had only 1.5 times advantage in ups to down.
    Of course, the strategy doesn’t work all of the time. Double-digit returns for the May/October period have occurred eight times since 1950. The most recent was the period just completed from May 1, 2017 to October 31, 2017 when the DJI jumped 11.6%. The best one was a 19.2% gain in 1958. In 2009, the May/October period gained 18.9%. But that was following one of the worst ever November/April periods that saw the DJI fall 12.4%. The November/April period has seen only three occurrences where it lost more than 10%. The most recent was the above-mentioned 2008 period where the DJI fell 12.4% while the other two occurred in 1969 and 1973. Interestingly enough, the first November/April period in 1969/1970 saw the Cambodian invasion while the 1973/1974 period was the OPEC oil embargo and the Watergate crisis.
    Since we are just coming off a May/October period that saw double-digit returns it is interesting to look at what happened in the ensuing November/April period. As we noted there have been eight occurrences of double-digit returns for the May/October period. We summarize in the table below.
    As can be seen from the table there were no occurrences of the DJI falling in the November/April period following double-digit gains in the May/October period. On five occurrences, the gains were also in double digits. On average, the November/April period saw gains of 14.6% following the May/October period that saw average gains of 14.5%. What all of that suggests is the coming six months could see double-digit gains once again for the DJI and the stock market as a whole.

    This post was published at GoldSeek on 12 November 2017.


  • Chart of the Week: Another Compelling Note of Caution

    This is a syndicated repost courtesy of Alhambra Investments. To view original, click here. Reposted with permission.
    Leveraged loan prices and WTI tracked each other pretty well during the ‘rising dollar’, unsurprising given that the oil sector was over-represented in most new deals as the one truly booming part of the domestic US economy. That was the case on the rebound, too, where leveraged loan prices rose at the same time oil prices did. And then both started falling again earlier this year in March.
    Only leveraged loan prices continued to fall, diverging noticeable from WTI in June/July. With prices still almost two years after the bottom significantly less than before the ‘rising dollar’, it’s an unmistakable note of caution amplified in the diverging trend recently from oil (indicating broader risk concerns than just US shale producers).
    It’s a gentle downturn in prices at this point, but a persistent one (eight month so far). The last time this leveraged loan price index diverged so much from WTI? Summer 2013.

    This post was published at Wall Street Examiner by Jeffrey P. Snider ‘ November 10, 2017.


  • Dramatic Footage: Bahrain Oil Pipeline Explodes, Bursts Into Giant Flames

    #BREAKING : Huge #fire resulted in a gas pipeline explosion in #Bahrain while ago. (exact cause yet to be confirmed) pic.twitter.com/kAgQ1nJARa
    — (@HSajwanization) November 10, 2017

    An oil pipeline in Bahrain exploded, and burst into giant fireball, as numerous videos posted on social media showed. According to the Saudi Gazette, an explosion caused a fire in an oil pipeline near Buri village. It adds that no injuries have been reported, and that civil defense teams are extinguishing the fire.
    More from Al-bilad Press (google translated):
    A large explosion of one of the oil pipelines near the area of ??Buri overlooking the market Waqif, and evacuate all houses near the scene of the explosion. The Waqif market was completely closed so firefighters could control the fire. The Ministry of the Interior through its official account on the site “Twitter” there is no casualties at the scene. It also announced the cutting off of traffic on the Crown Prince’s road towards Hamad City.
    The representative of the “country” from the heart of the pipe fire in the village of Buri that a huge fire block devoured a group of cars parked off the village and Souq Waqif.
    The delegate added that the civil defense mechanisms rushed to the scene of the incident from the area centered in the village of Damastan and began to block the flames of escalating fire and has been strengthened from the number of other centers.

    This post was published at Zero Hedge on Nov 10, 2017.


  • Radioactive Cloud Over Europe May Have Come From “Nuclear Accident” In Russia Or Kazakhstan

    About a month ago, we noted reports from the French nuclear watchdog ISRN that a spike in airborne radioactivity had been detected in the air in Western and Central Europe: “Ruthenium-106 has been detected by several European networks involved in the monitoring of atmospheric radioactive contamination, at levels of a few milliBecquerels per cubic meter of air.”
    According to IRSN calculations, the very low levels of atmospheric contamination of ruthenium 106 observed by European monitoring networks had no environmental or health consequences but several agencies across Europe were actively seeking answers on the origin of the contamination.

    This post was published at Zero Hedge on Nov 10, 2017.


  • OPEC’s War Against Shale Is Far From Over

    Authored by Gregory Brew via OilPrice.com,
    Despite the recent market rally and current bullish streak in oil prices, the years-long competition for market share between OPEC and U. S. shale producers shows no sign of abating, and will likely continue for the next several years at least.
    That was OPEC’s conclusion in the group’s World Oil Outlook released this week. OPEC believes U. S. shale production will grow faster than previously expected, reaching 7.5 million bpd by 2021, an increase of 56 percent from the group’s estimate last year.

    This post was published at Zero Hedge on Nov 10, 2017.


  • Asian Metals Market Update: November-10-2017

    The US dollar weakened and gold rose on suspicion that Trump’s tax cut proposal could see modifications. The next seven days is filled with market moving US economic data releases. The answer which investors will be looking for is what next after the expected December interest rate hike by the Federal Reserve. I am looking into global inflation/deflation targets for next year. Energy price trend will play a key role in inflation direction next year. The big challenge is to judge the pace of rise of crude oil prices and not the actual rise. At the moment the bottom for crude oil looks at $42 and top at $86+ in the next twelve months.
    Developments in bitcoins and block chain technology are being closely watched.

    This post was published at GoldSeek on 10 November 2017.


  • “Lull Before The Storm” – Will China Bring An Energy-Debt Crisis?

    Authored by Gail Tverberg via Our Finite World blog,
    It is easy for those of us in the West to overlook how important China has become to the world economy, and also the limits it is reaching. The two big areas in which China seems to be reaching limits are energy production and debt. Reaching either of these limits could eventually cause a collapse.
    China is reaching energy production limits in a way few would have imagined. As long as coal and oil prices were rising, it made sense to keep drilling. Once fuel prices started dropping in 2014, it made sense to close unprofitable coal mines and oil wells. The thing that is striking is that the drop in prices corresponds to a slowdown in the wage growth of Chinese urban workers. Perhaps rapidly rising Chinese wages have been playing a significant role in maintaining high world ‘demand’ (and thus prices) for energy products. Low Chinese wage growth thus seems to depress energy prices.

    This post was published at Zero Hedge on Nov 9, 2017.


  • Oil at Two-Year Highs as Saudi Arabia Engages in Its Own ‘Game of Thrones’

    Recently I identified five agents of change that I believe investors should know about right now. I’d like to add one more to the list: Mohammad bin Salman. The crown prince of Saudi Arabia, 32, was little known outside the region before this past weekend when he jailed members of the royal family, presumably in an attempt to consolidate power ahead of taking the throne. Resembling a plotline from an episode of ‘Game of Thrones,’ the mass detentions signal a seismic change in Saudi leadership – which, in turn, is putting upward pressure on global oil prices.
    Saudi Arabia is the world’s second-largest oil producer and single biggest oil exporter, so any development that might alert investors that the kingdom’s production levels or oil policy could be disrupted has historically had a profound effect on prices. When the country’s former king, Abdullah bin Abdulaziz Al Saud, passed away in January 2015, oil jumped more than 8.6 percent for the week.
    And so was the case on Monday, after news broke of the shakeup. West Texas Intermediate (WTI), the American benchmark for crude, closed above $57 a barrel for the first time since June 2015, adding nearly 35 percent from its summer 2017 low. A weaker U. S. dollar, down about 3.2 percent from the same time last year, is also providing support, as is slower U. S. supply growth following Hurricanes Harvey and Irma.

    This post was published at GoldSeek on 9 November 2017.


  • Asian Metals Market Update: November-9-2017

    Gold and silver are not out of the woods. So far Trump has not said anything to destabilize the markets. Fears of a surprise resulted in the rise of gold and silver yesterday. Developments in Saudi Arabia are here to stay. It may or may not affect metals and crude oil. The internet is filled with speculation that there is collusion between Israel and Saudi to expand Israel among other political agendas. Something is fishy in Saudi Arabia. Something big will happen in the Middle East over the coming months. Only big political news from the Middle east will impact global financial markets.
    The trading volumes in bitcoins is not even five percent of its current potential. Bitcoins and other crypto currencies have a lot higher to go. A few Mount Gox type vanishing will be needed to prevent bitcoin prices from zooming. Nations will be forced to adopt and regulate bitcoins. Greater adoption of crypto currencies will imply greater investment demand for gold and silver.

    This post was published at GoldSeek on 9 November 2017.


  • Silver Prices Have Gained 2.6% in the Last Week – and That’s Just the Start

    This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
    Silver prices are finally on the rise again, after their price weakness appears to have finally ended over the last trading week. Since my Oct. 31 update, when silver reached a bottom of $16.69, the metal has rebounded 2.6%, to $17.12 today (Tuesday, Nov. 7).
    The biggest catalyst this week is uncertainty surrounding Saudi Arabia and the kingdom’s arrest of 11 high-profile princes and four ministers. Prince Mohammed bin Salman – the son of King Salman – is widely seen as the power behind his father’s throne. While the government cited efforts to purge corruption as the reason for the arrests, they appear to be Prince Mohammed’s move to consolidate his power.
    The news not only pushed oil prices up nearly 3% yesterday (Monday, Nov. 6), but it also gave the silver price a 2.4% boost. That gain outperformed gold’s 1% gain and demonstrated the relative ‘undervaluation’ of silver compared to gold right now.
    And as much as gold stocks remain an incredibly undervalued sector, silver stocks are arguably even cheaper relative to silver. To me, that indicates an incredible buying opportunity is forming for silver right now.

    This post was published at Wall Street Examiner by Peter Krauth ‘ November 7, 2017.


  • Stock and Awe, Bears in Bondage

    The Trump Rally pushed ahead relentlessly through a summer full of high omens and great disasters, all which it swatted off like flies. Even so, all was not perfect in the market as nerves began to jitter midsummer beneath the surface even among the most longtime bulls. Wall Street’s fear gauge (the CBOE Volatility Index) lifted its needle off its lower post to a nine-month high after President Trump’s comments about ‘fire and fury’ if North Korea didn’t toe the line. (Mind you, the high wasn’t very far off the post because of how placid the previous nine months had been.)
    As volatility stirred languidly over the threat of nuclear war, stock prices took a little spill with all major stock indices seeing their biggest one-day drop since May. The SPX fall amounted to a 1.4% drop in a day – nothing damaging. The Dow dropped about 1% in a day. But beneath the surface, the market is looking different and shakier.
    For example, trading narrowed to fewer players as more stocks in the Nasdaq 100 finally moved below their fifty-two week lows than moved above them. Likewise in the S&P. This phenomenon is known as the ‘Hindenburg omen,’ and tends to precede major crashes.

    This post was published at GoldSeek on 7 November 2017.


  • Rising Gold Prices Lag Crude Oil as Saudis Accuse Iran of War, Equities Rise With Bitcoin

    Gold prices held most of yesterday’s 1.0% jump against the Dollar and touched new 3-week highs for Euro investors on Tuesday, trading higher as crude oil rose and Saudi Arabia accused Iran of “direct military aggression” tantamount to a declaration of war.
    Wall Street’s S&P500 index of US stocks ended Monday with its 11th new record closing high in a month.
    Crypto-currency Bitcoin today rallied to regain half of Monday’s 6% drop, trading back above $7000 after hitting 5 new daily all-time highs in succession last week.
    Listen to Tom McClellan on Stocks and Real Estate; Keith Barron on Peak Gold
    Crude oil spiked Tuesday to new 2.5-year highs, while Arabian stock markets fell hard – down over 3% – as news broke of further detentions and sanctions against senior Saudi figures by new crown prince Mohammed Bin Salman.
    “We expected to some interest in gold following the close above $1280,” says one Asian trading desk in a gold price note, “[but] Chinese selling appears to be capping the market.”
    “Stocks are at record highs, so you don’t need gold,” says George Gero at the wealth management division of Canada’s RBC.

    This post was published at FinancialSense on 11/07/2017.


  • Asian Metals Market Update: November-7-2017

    Higher crude oil prices are supporting gold and silver. Gold and silver have always flourished in an inflationary environment. Focus will shift to inflation. If crude oil prices continue to rise then one should use sharp dips to invest for the short term. I see a direct correlation between gold prices and crude oil prices. Trump’s South Korea visit and China visit will be closely watched. Ways to deal with North Korean nukes will affect gold and silver prices.
    Rising crude oil prices can change the balance sheet of emerging markets like India. Governments will be caught between the choice of fiscal management and inflation management. Most of the emerging markets have enough reserves to withstand an energy shock. I see emerging market currency weakness, if Nymex crude oil continues to rise to $80 and consolidates at $80. Under the current scenario crude oil looks headed for $100 in the next twelve months as long as it trades over $46. Emerging market stock markets will form a medium term top and could move into a bearish phase if crude oil prices rise and consolidate around $80. As long as crude oil prices do not break $80, emerging markets are in a safe zone.
    Historically crude oil prices have always zoomed under republicans. The current rise in crude oil price is an early signal of history repeating itself.
    COMEX GOLD DECEMBER 2017 – current price $1280.10
    Bullish over $1275.50 with $1291.40 and $1296.30 as price target.
    Bearish below $1270.40 with $1264.60 and $1257.30 as price target.

    This post was published at GoldSeek on 7 November 2017.


  • Can Solar Survive Without Subsidies?

    In an increasing number of regions in the US, solar (and wind) power can produce electricity at the same cost – or lower – than more traditional fuels, like coal or natural gas.
    We call it reaching ‘grid parity’ here in the business.
    The catch, however, is what happens when government subsidies are removed from the calculation.
    That’s why what happened at the end of September in the UK may be a sign of things to come across the pond here in the US.
    Read Solar Costs Are Dropping Much Faster Than Expected
    See, the British just brought a new solar power project online without relying on subsidies. Only the market will dictate what this power plant gets paid.
    And the way they did it shows where the solar industry and energy markets in the US are headed next…

    This post was published at FinancialSense on 11/06/2017.