Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Energy Sector Strong Bullish Trends Due to Demand Growth Fundamentals

Commodities / Energy Resources Jun 18, 2008 - 12:59 PM GMT

By: Joseph_Dancy

Commodities The price of crude oil hovered around $100 a barrel last month, while natural gas futures pushed toward $10 per thousand cubic feet. Both are impressive due to the fact we are in ‘shoulder season' – a time when moderating weather tends to weaken prices. Long term demand and supply trends remain powerfully bullish. Last month the following events occurred in the energy sector:


  • The International Energy Agency updated their 2008 energy forecast. They project world oil demand would grow by 1.7 million barrels per day (b/d), up from 0.9 million b/d in 2007. The IEA projected demand would average 87.5 million b/d in 2008 – a record. The agency noted that transport fuel demand in China remained “very strong”. Year-on-year imports of crude oil to China increased more than 12% in 2007, and the trend continues into 2008. (Financial Times)
  • A UBS report compiled a roster of major crude oil projects – those with expected production of more than 100,000 barrels a day – due to come on stream through 2015. With rising demand, plus declining production from existing fields, the industry needs to add at least 4.5 million barrels a day of new supply each year. But relying on major projects won't meet that target according to UBS. In the current year the analysts estimate new supply sources will produce 4.4 million barrels a day, but that figure drops to 2.9 million in 2009 and a paltry 1.7 million in 2010.

•  The Wall Street Journal had an interesting chart last month which illustrated the trends in excess crude oil production capacity from the OPEC countries. As demand rockets upward – demand is estimated to increase 1.7 million barrels per day in 2008 – the excess productive capacity has fallen to around 1.8 million barrels per day. The lack of excess capacity supports the higher global oil prices we have seen the last few years. (see chart above)

•  Two interesting charts were published by Gail Tverberg on the OilDrum.com last month. They illustrate the trend in crude oil prices to much higher levels – while at the same time global production seems to have leveled off. If production does not increase, expect prices to continue to trend upward. 

  • Oil and natural gas discoveries in the Gulf of Mexico hit a 10-year low in 2007. According to Wood Mackenzie, a research firm, companies found the equivalent of 553 million barrels of oil in the Gulf last year, half as much as in 2006 and the lowest figure in a decade. The number of exploration wells drilled in 2007 was also down and close to the 10-year-low. The Gulf of Mexico will continue to be a huge source of energy as it accounts for 25 percent of U.S. oil production and 15 percent of natural gas production. ( Houston Chronicle)
  • The oil import bill for the U.S. has skyrocketed 300% since 2002. The oil import bill in 2007 was $327 billion. It should easily top $440 billion this year. The projected increase for 2008 is based on an average $90 per barrel. In 2002, before the current bull market for oil began, U.S. oil imports cost less than $103 billion. (Petroleum Intelligence Weekly)

     

 

•  The recent run-up in U.S. natural gas prices can be partially attributed to the low level of liquefied natural gas (LNG) imports into the Lower 48 States according to the U.S. Energy Information Administration (EIA). LNG cargoes have been heading to Europe and Asia , where buyers continue to purchase LNG at much higher prices than have prevailed in U.S. markets. The reduction in imports to the U.S. reflects changes in global demand for LNG. Japan , the world's largest LNG importer, is relying more on LNG as a fuel for electric power generation. Some countries in Asia and Europe rely on LNG imports as a primary source of natural gas.

  • China 's only LNG facility may double purchases of individual liquefied natural gas in 2008 according to official sources. The terminal bought seven individual cargoes for immediate delivery last year. The company is in talks to buy additional LNG on multiyear terms as it increases import terminal capacity. Utilities in Japan and South Korea paid as much as $20 per million British thermal units this winter, more than double the U.S. benchmark price at Henry Hub, Louisiana .
  • Ocean shipping regulators and industry participants are debating how to reduce harmful sulfur dioxide emissions from their ships. Part of the industry, led by an independent tanker owners' organization, advocates a total ban on high-sulfur marine fuels in favor of lower sulfur diesel fuels. The International Maritime Organization (IMO), the UN agency responsible for preventing pollution from ships, will consider the controversial fuel proposal. The switch to diesel at sea would increase global demand for that fuel by the equivalent of one-and-a-half times the annual automotive diesel consumption in Europe .
  • China 's fast-growing economy adds one coal generating plant a week. With raw-materials prices rising and the global economy slowing, what has surprised some analysts is how insatiable the appetite for energy is—and the implications that has for the rest of the world. China 's nuclear power sector is also growing faster than expected. The Chinese government is now shooting for 50% more nuclear power than originally planned, with generation capacity coming very close to the output of France . In France this level of generation equates to 80% of the nation's electricity supply; the same amount in China would meet roughly 4% of demand. What this demand will do to global uranium prices, which have already gone vertical in the last five years, is anybody's guess.
  • China 's leaders are facing renewed pressure over shortfalls in diesel and gasoline, with lines growing at filling stations in major cities as the gap widens between international crude oil values and centrally controlled fuel prices. The shortages, first reported in southern and inland China , appeared to be spreading to the wealthier coastal areas as filling stations struggled to get shipments from refiners. More imports might be required to address these shortages.

By Joseph Dancy,
Adjunct Professor: Oil & Gas Law, SMU School of Law
Advisor, LSGI Market Letter

http://www.lsgifund.com

Email: jdancy@REMOVEsmu.edu

Copyright © 2008 Joseph Dancy - All Rights Reserved

Joseph R. Dancy, is manager of the LSGI Technology Venture Fund LP, a private mutual fund for SEC accredited investors formed to focus on the most inefficient part of the equity market. The goal of the LSGI Fund is to utilize applied financial theory to substantially outperform all the major market indexes over time.

He is a Trustee on the Michigan Tech Foundation, and is on the Finance Committee which oversees the management of that institutions endowment funds. He is also employed as an Adjunct Professor of Law by Southern Methodist University School of Law in Dallas, Texas, teaching Oil & Gas Law, Oil & Gas Environmental Law, and Environmental Law, and coaches ice hockey in the Junior Dallas Stars organization.

He has a B.S. in Metallurgical Engineering from Michigan Technological University, a MBA from the University of Michigan, and a J.D. from Oklahoma City University School of Law. Oklahoma City University named him and his wife as Distinguished Alumni.

Joseph Dancy Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in