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Energy & Commodities

Forget Oil Prices, Oil Majors Are A Buy

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Posted by OilPrice.com

on Tuesday, 22 August 2017 06:59

Oil stocks have been performing dismally this year, and oil prices have failed to sustain a rally, so why are these stocks still attractive? Low valuations and high dividend yields, say analysts. 

Supermajor oil companies are living a new reality that is based on new profits in a forever-low oil price environment—and globally, analysts say, the oil sector is a great investment.

Value has returned, because international oil giants have adapted.

The initial enthusiasm over OPEC’s production cut deal died out rather unceremoniously, and oil prices only enjoyed a brief rally, hammered down continually by rising U.S. supply and slower-than-expected drawdowns on inventory.

Since the beginning of the year, the oil stocks have underperformed the broader market indices both in the U.S. and in Europe.

As of the early morning on August 18, the Stoxx Europe 600 Oil & Gas index—which includes Europe’s majors Shell, BP, Total, Statoil, and Eni, among others--was down 11.94 percent year to date.

Screen Shot 2017-08-22 at 7.03.18 AM

At the same time, the Stoxx Europe 600 index was up 4.27 percent year to date.

It’s all rather bleak. Until you look at dividend yields and valuations.



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Energy & Commodities

The Single Biggest Bullish Catalyst For Oil

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Posted by OilPrice.com

on Thursday, 17 August 2017 06:36

99fb49f10a87138e349a6cb290191410One of the key objectives for OPEC is to bring down inventories, a goal that has been elusive this year. But if the oil futures curve is anything to go by, the oil market is showing signs of tightening.

Brent futures have recently begun to exhibit a state of backwardation, which is when near-term oil futures trade at a premium to contracts dated further off into the future. This is the first time in years that backwardation has occurred, and most analysts are taking it as a sign that the oil market finally could be getting closer to rebalancing. In the past, backwardations have accompanied a rebound in the oil market after a bust, while a contango (the opposite of backwardation) tends to occur when the market crashes because of a supply glut.

There are several reasons why backwardation is bullish, which has been discussed in previous articles. A declining futures curve makes it uneconomical to store oil, so backwardation could accelerate the drawdown in inventories. It also complicates the hedging strategies of shale producers, which could hold back expansion plans. It also is a symptom of tightening near-term supplies, although, to be sure, the flip side of that argument is that it could merely be a reflection of expectations that the supply glut will reemerge at some point in the future.



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Energy & Commodities

Copper New Bull Trend? A correction first makes sense...

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Posted by Jack Crooks - Currency Currents

on Thursday, 17 August 2017 06:22

After what appears as a 5-wave rally; a correction lower would make sense.  But, it also appears a new bull trend may be underway. 

Screen Shot 2017-08-17 at 6.21.48 AM

....also from Jack Crooks:

Don't Bury The Buck Just Yet



Energy & Commodities

Is this the Start of a Hot New Metals Bull Market?

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Posted by Frank Holmes - US Global Investors

on Tuesday, 15 August 2017 06:14

COMM-aluminum-metals-08112017

Major U.S. indices slid for a second straight week as President Donald Trump and North Korea both escalated their saber-rattling, with Kim Jong-un explicitly targeting Guam, home to a number of American military bases, and Trump tweeting Friday that “Military solutions are now fully in place, locked and loaded.” The S&P 500 Index fell 1.5 percent on Thursday, its largest one-day decline since May. Military stocks, however, were up, led by Raytheon, Lockheed Martin and Northrop Grumman.

As expected, the Fear Trade boosted gold on safe haven demand. The yellow metal finished the week just under $1,300, a level we haven’t seen since November 2016. Last week, Ray Dalio, founder of Bridgewater Associates, the largest hedge fund in the world, said it was time for investors to put between 5 and 10 percent of their portfolio in gold as a precaution against global and domestic geopolitical risks. The threat of nuclear war is at the top of everyone’s mind, but Dalio reminds us that our indecisive Congress could very well fail to agree on raising the debt ceiling next month, meaning a “good” government shutdown, as Trump once put it, would follow.

Dalio’s not the only one recommending gold right now. Speaking to CNBC last week, commodities expert Dennis Gartman, editor and publisher of the widely-read Gartman Letter, said that he believed “gold is about to break out on the upside strongly” in response to geopolitical risks and inflationary pressures. Gartman thinks investors should have between 10 and 15 percent of their portfolio in gold.

Government shutdowns haven’t always been harmful to the stock market—during the last one, in October 2013, stocks actually gained about 3 percent—but I agree that it might be prudent right now for investors to de-risk and ensure their portfolios include safe haven assets such as gold and municipal bonds. Dalio and Gartman’s allocation percentages mirror my own. For years, I’ve recommended a 10 percent weighting in gold, with 5 percent in bullion and 5 percent in high-quality gold stocks, mutual funds and ETFs.

Analysts Bullish on Metals and Commodities



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Energy & Commodities

Is Kim Jung-un Blinking?

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Posted by Martin Armstrong - Armstrong Economics

on Monday, 14 August 2017 07:57

Kim-Jung-un-Characture
Kim Jung-un in North Korea is refusing to blink yet he maybe. He has turned domestically first in the ongoing crisis and has now announced a massive army recruitment program. An article in a Pyongyang-based propaganda newspaper today declared already more than 3.5 million people had signed up to fight. The newspaper is claiming that millions were “volunteers” including students and former soldiers.

The truth is that the North Korean army is subjected to absolute obedience to the Kim dynasty. If civilians are scrambling to volunteer, it is also likely that they are malnourished and desperate civilians. Yet this peals back the fact that Kim is blinking.


His latest claim that 3.47 million people had asked to enlist in the army since the North Korean crisis began, is shifting his power achievement away from missiles and to people. Even their currency reflect the old communist subservient duty to the state. The man holds his Marxist bible and the woman is gathering wheat in the fields. This may have the impact of worsening the economy if true for feeding that many more soldiers is impossible for his regime without reducing rations for the current army soldier.



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