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Viewing entries tagged with 'Gas'
Interesting Snippet on US Oil Production
All
I have been a fan of shorting U.S oil on just this theme of increased U.S production (refer ‘Time to sell Crude Oil?’ dated 29 Aug. Crude then US$96 – now US$85).
A somewhat less risky trade to capture this theme could be a ‘pairs’ trade selling U.S Crude buying Brent as the supply expectations widen.
G.
US is top dog in oil
Many of us can (vaguely) remember the oil crises of the mid-70s when the Middle East countries held the world to ransom over oil supply, causing petrol prices to skyrocket.
An everyday item that we all took for granted suddenly became an expensive luxury, particularly if your Dad drove a big Holden V8 gas guzzler to cart the kids around.
Now the worm has turned.
For so long, Saudi Arabia has been the world’s largest single country producer and together with all its OPEC mates has kept the western world on tenterhooks for the best part of three decades or more.
U.S. Energy Production – click here to view chart
But now with the shale gas revolution in the US (and elsewhere around the non-OPEC world), the International Energy Agency (IEA) thinks that the US will become a net oil exporter by 2030 and almost self-sufficient in oil by 2035. The US currently imports around 20% of its oil requirements and is by far the biggest consumer of petroleum products.
The IEA’s latest annual review of world energy supply says the US will overtake Russia as the biggest gas producer by 2015 and become the world’s largest oil producer by 2017.
U.S. Fossil Fuel Production – click here to view chart
The combination of producing its own energy and more frugal consumption through technology, education and basic economics will also dramatically shift the geopolitical balance of power around the world.
In short, the US may not have to be so friendly to the Saudis or anyone else in the Middle East any more.
The shale gas bonanza also has the fortuitous side effect of replacing coal as the main energy fuel stock in the US which would also go a long way to mitigating many greenhouse gas concerns.
This story has a very long way to play out, but has already become a major global issue.
Update - the Graveyard - USD/JPY
All
This trade is progressing slowly but surely. To recap, the bones of this trade are;
# The 30 year run of trade surpluses has now turned to deficits as the Japanese turned off their nuclear power stations after the Tsunami inspired Fukushima disaster. As a result the Japanese now import the vast majority of their energy requirements.
# Japan’s demographics are poor with the population forecast to decline to 90 mio by 2055 from the 127 mio peak in 2004. Those citizens that are left will be much older too.
# The Bank of Japan has set forth on a new round of monetary policy easing. Top Japanese research house Nomura have been widely quoted recently regarding the new policy saying that the “JPY is likely to weaken due to the BoJ becoming more proactive as a result of likely changes in government leadership as well as changes at the Japanese central bank in coming months.
# …and the budding theme that we here at Edge Capital are watching with great interest is the vast supplies of cheap energy (shale gas) that the U.S is currently harnessing. We think this could be a major kicker for the U.S in coming years. Cheap currency and super low interest rates have been prevailing for 5 years now, add super lean business organisations and top it off with cheap energy. That should be one tasty cake when baked.
USDJPY – click here to view chart
P.S. Got to love NZD/JPY on this basis too !
Cheers G.
Natural Gas - Price ready to explode?
All
Natural Gas prices have been so low (12 year lows) that many drilling operations have been suspended at a time where much of the United States heavy industry is moving toward converting their energy needs to gas based.
Many analysts have been scratching their heads at the lack of upside in gas prices given that so many conversions to gas are on-going.
Scratch heads no more, natural gas prices look ready to explode (pun intended).
Here is a 10 year chart of weekly Nat Gas. The potential for vastly higher prices is obvious.
Natural Gas Weekly – click here to view chart
A closer look at the recent price action is enlightening. A series of higher weekly lows, a doji rejection of lower levels 5 weeks ago followed by a bullish engulfing week 2 weeks later then the sharp jump on Monday. The charts are crammed with bullish signals.
Natural Gas A Closer Look – click here to view chart
Feel free to call in for further details on trading this commodity.
G.
