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Premium Article Archive

  • Why The Latest Rally Needs To Be Sold

    Oil prices breached the $50 mark on Thursday as Saudi Arabia and other Gulf states deployed airstrikes into Yemen in defense of the Sunni leadership and against the Shiite Houthi rebels. While oil has moved upwards rapidly after retesting old lows in the low 40's last week, this latest 4% move in oil is counterintuitive and needs to be sold. Oil has been laboring under very deep stockpile gluts and projections from virtually every American E+P that production is not yet ready to decrease. With surpluses of more than 30 days here in the US, we've reached historic records on…

  • The Illusion Of High Yields

    Several times in the last few months I have suggested that investors look to accumulate energy stocks for the long term right now, based on the belief that the mid-$40s lows for WTI would hold. There are two provisos that must go with that suggestion. First, you must be prepared to cut any position, probably for a loss, should oil break below $40. Second, not every energy company is a bargain at current levels. The second proviso is particularly important for those seeking income from their investments. In an environment where a 10 Year U.S. Treasury yields around 2 percent,…

  • This Nation Has Potential To Be Europe’s Biggest Crude Producer

    Introduction Albania is not typically on the European tourist route. Several decades of floundering economic growth and isolation under a communist dictator will do that. Now with one of the lowest per capita GDP’s in all of Europe, the former communist country has struggled to find its footing in the post-Soviet era. Albania suffers from awful infrastructure, which has deterred foreign investment. Albania is rich in oil reserves, but has been unable to fully capitalize on them for quite some time. Large companies like Occidental Petroleum (NYSE: OXY), Royal Dutch Shell (RDS.A), and Chevron (NYSE: CVX) rushed into Albania after…

  • Global Energy Advisory – 27th March 2015

    Frontier Updates • Amid the oil price slump, if you’re considering Africa, forget Nigeria and look to Kenya. The east African emerging oil giant has just received a boost from the World Bank, which raised its growth forecast for the country. According to the World Bank, Kenya’s economy will be boosted because, for now at least, it’s a net importer of crude. Nigeria, by comparison, is being pummeled by the Boko Haram insurgency, and its revenue base is not diversified enough to be able to handle low oil prices. That’s good for other investments, but what about Kenyan oil? We’re…

  • Extent Of Rally Depends On Saudi Assault

    The spike in May NYMEX Crude Oil futures during the pre-market trading session on Wednesday night (Eastern Time) came as a surprise to many traders because, let’s face it, most have us had been lulled to sleep reading about oversupply and rig counts since OPEC decided in late November that it would not support another production cut. Based on the size of the rally and the subsequent “give back” during the regular session trading hours, it looks as if many traders were unprepared for the news and shifted to panic mode when the news that Saudi Arabia had bombed the…

  • Exports Looking More Likely

    How quickly has the oil market has changed? Since November of last year, oil predictions have run the gamut from complete wipeout to $20 a barrel to temporary distress and a quick V-bottom recovery to $75. As pessimistic as I've been on the length of time that depressed prices in oil will remain, I've been equally skeptical both of big up and downslides from current prices. I cautioned that oil wouldn't see $60 a barrel as prices drove into the mid-$50's and I'm again warning that oil will never see the $25-30 dollar disaster price that many are predicting now.…

  • When Stock Issuance Isn’t A Bad Thing

    In general, when a company announces plans to issue more stock, it has a rapid negative effect of the share price. That is understandable, each share is obviously worth less when there are more of them issued. Conventional wisdom says that the underlying value of the company hasn’t changed much, nor have projected earnings, but the number of shares has increased; each share must therefore fall in value. There are exceptions, however, and many of them have been seen recently in the oil exploration and production (E&P) sector. The latest company to jump on the equity issuance bandwagon is PDC…

  • Winners And Losers Of EPA’s Carbon Plan

    Introduction The United States is hoping to take drastic measures to cut its greenhouse gas emissions. However, with the U.S. Congress gridlocked and unable to take any meaningful steps on pretty much anything, the Obama administration has decided to act unilaterally using existing executive authority. President Obama, through the Environmental Protection Agency, has proposed limits on greenhouse gas emissions from both new – and crucially – existing power plants. The target is coal, the dirtiest form of electricity generation. Coal currently accounts for nearly 40 percent of the total electricity generation mix across the country. The EPA’s “Clean Power Plan”…

  • Global Energy Advisory – 20th March 2015

    Politics, Geopolitics & Conflict • Iraqi forces (backed by Shi’ite militias) have retaken most of the towns and the area surrounding Tikrit, in central Iraq, but have made little progress taking the city of Tikrit itself from the Islamic State (IS). There are oilfields outside of Tikrit, which IS has set fire to in an attempt to distract Iraqi forces from the city. Here we have the al-Ojail oilfield. It’s not the major fields of Basra, but it does pump out around 25,000 bpd that goes on to Kirkuk refineries further north and east. It also produces about 4 million…

  • Support Crumbles As Sellers Resume Control

    Crude Oil Crude oil support fell apart last week, leading to a price collapse. The selling momentum was strong enough to drive the market into a new low for the year. Some traders are calling $40.00 support, but this is merely a psychological level. Based on the building of a bearish fundamental picture, it looks as if this market is headed a lot lower than $40.00. At this time, the price level is not as important as the chart pattern and the price action. And the chart pattern and price action indicate that sellers are in control and buyers are…