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Oil Markets Will Only Get Tighter

Oil Markets Will Only Get Tighter

OPEC has agreed to increase…

The Nuclear Stars Align

We've talked before about how Japan's nuclear woes are driving global LNG prices.

With 95% of the Japanese nuclear reactor fleet idled since the Fukushima disaster, Japan has been buying all the LNG it can for power generation. Causing a noticeable lift in global pricing.

But let's not forget Korea.

News came last week that Korea will re-start two nuclear plants that had been down for maintenance. Many investors don't realize, but Korea's nuclear fleet has also been decimated of late. Currently, 8 of the country's 23 reactors are down. Many due to falsified documents discovered in May for parts at the plants.

The re-start of two will help. But it still leaves over 25% of Korean nuclear power off-line.
Combine this with Japan's nuclear issues (and an unusually hot summer in the region) and you get "the stars aligning" for a big lift in LNG demand. But it is temporary. Observers celebrating +$15/MMbtu prices in this part of the world need to remember that.

Japan is starting the process of re-starting its nuclear sector. Korea will undoubtedly push hard to do same.

Be ready when nuclear replaces gas once again.

Here's to those times when everything comes together,

Dave Forest



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