U.S. Natural Gas Industry Stifled By DOE Inaction [View article]
China does not export non-renewable resources. They are putting the future needs of their country first and would be more than happy to use up our NG before depleting their own. (Note how they stopped exporting rare earths) Smart people. Exporting NG from North America, especially to China, would go down in history as a colossal sell out of a precious natural resource that we all need to provide us with heat in our winters. There is no substitute other than costly electricity and that would require building a lot more power plants that would be fueled by what? Coal? Does anybody care about future generations who are going to have deal with the inevitable severe energy shortages?
Weathering The Storm: Oil Demand To Rise Despite Sluggish Global Economy [View article]
Much of this article does not make any sense. The author states: "The increase in public transportation is another important factor leading to the increase in oil demand." How can that be? Should we quit using buses other forms of public transportation?
Author states: "Moreover, due to the start of the winter season, gasoline prices have already started showing an upward trend". Wrong conclusion. Gasoline prices, on a seasonal basis, usually trend down, not up, during the winter months and start moving up in Feb. While it is true that the national average has been on the rise, (all due to California), it is because of refinery issues and the exporting of distillates that have resulted in regional shortages and not just because winter is coming.
Author states: "We believe crude oil prices will show a further upside in the coming period due to rising tensions between Turkey and Syria." Why? Neither country is a significant oil producer and it is a stretch to see that conflict widening to the point of disrupting oil supplies. If anything causes oil to spike, it will be a war directly involving Iran who have the capability to severely disrupt oil supplies.
The Fracking Tales Of Natural Gas Producers [View instapost]
The author has made a good case. This is not a good time to be in NG producer stocks. I also suspect that NG will decline for a number of weeks (shaking out the longs), before resuming it's upward march. As Mark pointed out, the producers need higher prices to make profit on the shale plays. They will eventually get them but it won't be overnight. I will be a buyer below 2.90. Of course, winter weather can change everything. The coal stocks are looking stronger but I still am wary of JRCC when there are many healthier coal stocks to choose from. I don't think we are going to see any more significant pullbacks in the coal sector and any pullbacks can be bought with confidence.
jmpbrown: Gasfrac has been losing money in the last two quarters with a significant decline in revenue. In September, both the CEO and CFO 'left the company". Hmmmm...does that sound like a success story?.
Why The Natural Gas Picture Is Improving [View article]
In reference to the upcoming winter, the author states : " this one will be colder than last year, nationwide". Really and who's crystal ball are we trusting on that call ? I do recall that last winter was predicted be a cold one and we all know how that turned out. In reference to the NG storage, he states: "The inventory is now the smallest in the last two years". What was not stated is that NG storage is currently above the level it was last year and also above it's five year average. No shortage just yet. And finally, the author sees a huge shift, by the power companies, from coal to NG and that is correct so long as the price of NG is no more than 4 bucks. Below that price, they will use natural gas to the maximum extent they can but above it, coal is king. By 2020 NG may very well be the fuel of choice for power generation. Still, I wouldn't advise anyone to be loading up now and hoping for a big payoff several years from now.. Contango decay in the NG futures market makes long term investing very challenging, to say the least. And finally we have the statement: " Then there is the LNG export surge, scheduled to begin by 2014." Yes, it is expected that there should be some exporting by the end of 2014 (permitting problems aside), but it won't be a "surge" and it could take a few more years before such exports become significant. There is good reason to be bullish on the long term prospects for NG and it is even possible it could shoot as high as 5 bucks by the end the upcoming heating season, but there are of pitfalls that could send the price down. The wild card in this game is the weather. Another warm winter would cause prices to stagnate or even test the 2012 lows. On the other hand, a cold winter coupled with the current low rig current would send prices soaring. NG is always a risky bet so let's be careful befoe we bet the farm on this one.
The bottom line is that the EPA is now convinced, by the only studies it cares about (their own), that fracking has been contaminating water in at least one area. The gas industry has been operating as if they were drilling in the the "wild west" and the EPA is going to introduce regulations that will protect water supplies, and so perhaps that is a good thing. The industry would adapt if that were all they had to deal with.
Paulo is absolutely correct when he says there could be legal issues. The law firms have been waiting for the EPA to validate the contamination concerns and they will be on the gas companies like the rabid dogs. Someone will be successful in "proving " that they got cancer from water contaminated by fracking and the dodo will hit the fan. Expect multiple lawsuits within a few years time. The lawyers will happily destroy the industry for fat pay offs, thanks to the courts.
What does all this mean for an investor? Actually, quite a bit. Valuable properties could be deemed off limits by the EPA and become worthless. Regulations will drive up well costs that are already very high. However, the worst outcome will be the legal costs and the unpredictability of court awards that could conceivably, run into the billions. I would be very worried if I were the CEO of Encana .
This issue has nothing do with Obama. Why do Americans want to blame their President anytime something happens that they don't like? It is ridiculous. This is about the EPA and it's enormous powers to regulate, regardless of who's president , and they will regulate, count on it.
The Stock Market: Update On Increasing Risks & Consequences [View article]
I should mention that I do agree with the author's overall thesis. The the next major market decline is going to be particularly nasty but I have no clue when it will start or end. However, I do believe that we will ultimately see the S&P below 500 after a few years of grinding downwards punctuated by numerous false rallies. I wouldn't go wild, shorting or buying reverse ETFs, just yet.
The Stock Market: Update On Increasing Risks & Consequences [View article]
We still have a few weeks to go in October and a crash is just around the corner. If it doesn't happen this month I predict it will happen in November and if not then ,December, or maybe January. If it hasn't happened by then for sure it will be February or March. If not by then ....well, you get the picture . I think my predictions are just as good as any analyst and such "predictions" are really quite useless. There are many analysts who never stop predicting a crash so that when it finally happens, they can write a book and make pile of cash. Of course there will eventually be a crash! Don't ask me when because my crystal ball is busted. Just for the record, I see a sharp decline followed by new highs for the S&P. (but there will be crash, someday, honest.)
Market Tops And Bottoms Since 1950: The October Effect [View article]
We still have a few weeks to go in October and a decline is just around the corner. (my expectation). If it doesn't happen this month I predict there will be a pull back in November, if not then ,December, or January. If it hasn't happened by then it will be February or March for sure (maybe). If not by then ....well, you get the picture. I think my predictions are just as good as any analyst or self professed "expert" that write bearish columns here on SA. ( I am not referring to the author, he is just presenting historical facts)
More from the IEA: Iranian oil output plunged to 2.63M bbl/day in September, the lowest in 23 years and down more than 1M bbl/day in the past year. The oil market had expected a rebound M/M on new purchases by South Korea and Turkey on top of regular buying by China, India and Japan. Compliance with sanctions "appears to have tightened," IEA says. [View news story]
Negative Correlation Between Gold And The Stock Market [View article]
The author starts out by pointing out that since the beginning of the year, the S&P is up 15% and gold is up 11%. ( a positive correlation?) Then he states that over the very long term, there has been a negative correlation between the two. He goes on to show that during select short periods, there appears to be a negative correlation. (last 9 months a fluke, perhaps?) So, in the near future, because of this perceived correlation, is gold going up, and the S&P down or vice-vesa? How one can profit from this erratic correlation? I don't see a way that doesn't involve waiting for a decade for the correlation to assert itself. Yes, some people believe that gold is a "safe haven" during times of unexpected bad news. However, but that tends to be a short term effect. I have done quite well, over the years, shorting gold a few days after it has shot up due to some nasty world event. There is a much stronger (negative) correlation between the value of the U.S. dollar and gold.
Today In Commodities: Corn Gains On USDA Report [View article]
How can one ever be comfortable with an NG trade? NG will easily move thirty cents between the high and low on a day trade. I trade it because it is easy enough if you know the primary trend, which is now clearly up. I would not be surprised to see 3.80 before it backs off some.
China's Performance Gap... Open Wide [View article]
Good article. In fact, the Shanghai Composite has been out performing the S&P for the past three weeks so it looks like it's time to get in on the ground floor, along with the smart money boys. Accumulating Chinese equities, and related ETFs, should prove to be very profitable down the road.
This Oil Producer Is A Must-Know Company [View article]
Bloodhawk: I just bought 5000 shares at .42 because of your hot stock tip. You must be some kind of insider, right? Beware of the SEC, a they have the legal tools to trace your identity. Thanks for the tip.
U.S. Natural Gas Industry Stifled By DOE Inaction [View article]
Weathering The Storm: Oil Demand To Rise Despite Sluggish Global Economy [View article]
The author states: "The increase in public transportation is another important factor leading to the increase in oil demand." How can that be? Should we quit using buses other forms of public transportation?
Author states: "Moreover, due to the start of the winter season, gasoline prices have already started showing an upward trend". Wrong conclusion. Gasoline prices, on a seasonal basis, usually trend down, not up, during the winter months and start moving up in Feb. While it is true that the national average has been on the rise, (all due to California), it is because of refinery issues and the exporting of distillates that have resulted in regional shortages and not just because winter is coming.
Author states: "We believe crude oil prices will show a further upside in the coming period due to rising tensions between Turkey and Syria." Why? Neither country is a significant oil producer and it is a stretch to see that conflict widening to the point of disrupting oil supplies. If anything causes oil to spike, it will be a war directly involving Iran who have the capability to severely disrupt oil supplies.
The Fracking Tales Of Natural Gas Producers [View instapost]
What If They Come After Fracking? [View article]
Why The Natural Gas Picture Is Improving [View article]
In reference to the NG storage, he states: "The inventory is now the smallest in the last two years". What was not stated is that NG storage is currently above the level it was last year and also above it's five year average. No shortage just yet.
And finally, the author sees a huge shift, by the power companies, from coal to NG and that is correct so long as the price of NG is no more than 4 bucks. Below that price, they will use natural gas to the maximum extent they can but above it, coal is king.
By 2020 NG may very well be the fuel of choice for power generation. Still, I wouldn't advise anyone to be loading up now and hoping for a big payoff several years from now.. Contango decay in the NG futures market makes long term investing very challenging, to say the least.
And finally we have the statement: " Then there is the LNG export surge, scheduled to begin by 2014." Yes, it is expected that there should be some exporting by the end of 2014 (permitting problems aside), but it won't be a "surge" and it could take a few more years before such exports become significant.
There is good reason to be bullish on the long term prospects for NG and it is even possible it could shoot as high as 5 bucks by the end the upcoming heating season, but there are of pitfalls that could send the price down. The wild card in this game is the weather. Another warm winter would cause prices to stagnate or even test the 2012 lows. On the other hand, a cold winter coupled with the current low rig current would send prices soaring. NG is always a risky bet so let's be careful befoe we bet the farm on this one.
What If They Come After Fracking? [View article]
Paulo is absolutely correct when he says there could be legal issues. The law firms have been waiting for the EPA to validate the contamination concerns and they will be on the gas companies like the rabid dogs. Someone will be successful in "proving " that they got cancer from water contaminated by fracking and the dodo will hit the fan. Expect multiple lawsuits within a few years time. The lawyers will happily destroy the industry for fat pay offs, thanks to the courts.
What does all this mean for an investor? Actually, quite a bit. Valuable properties could be deemed off limits by the EPA and become worthless. Regulations will drive up well costs that are already very high. However, the worst outcome will be the legal costs and the unpredictability of court awards that could conceivably, run into the billions. I would be very worried if I were the CEO of Encana .
This issue has nothing do with Obama. Why do Americans want to blame their President anytime something happens that they don't like? It is ridiculous. This is about the EPA and it's enormous powers to regulate, regardless of who's president , and they will regulate, count on it.
The Stock Market: Update On Increasing Risks & Consequences [View article]
The Stock Market: Update On Increasing Risks & Consequences [View article]
There are many analysts who never stop predicting a crash so that when it finally happens, they can write a book and make pile of cash.
Of course there will eventually be a crash! Don't ask me when because my crystal ball is busted.
Just for the record, I see a sharp decline followed by new highs for the S&P. (but there will be crash, someday, honest.)
Market Tops And Bottoms Since 1950: The October Effect [View article]
More from the IEA: Iranian oil output plunged to 2.63M bbl/day in September, the lowest in 23 years and down more than 1M bbl/day in the past year. The oil market had expected a rebound M/M on new purchases by South Korea and Turkey on top of regular buying by China, India and Japan. Compliance with sanctions "appears to have tightened," IEA says. [View news story]
Negative Correlation Between Gold And The Stock Market [View article]
How one can profit from this erratic correlation? I don't see a way that doesn't involve waiting for a decade for the correlation to assert itself.
Yes, some people believe that gold is a "safe haven" during times of unexpected bad news. However, but that tends to be a short term effect. I have done quite well, over the years, shorting gold a few days after it has shot up due to some nasty world event.
There is a much stronger (negative) correlation between the value of the U.S. dollar and gold.
Today In Commodities: Corn Gains On USDA Report [View article]
China's Performance Gap... Open Wide [View article]
Another ETN Bites The Dust [View article]
This Oil Producer Is A Must-Know Company [View article]