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Energy & Commodities

An Outlook for Crude Oil

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Posted by Don Valiloux - Timing the Market

on Tuesday, 21 February 2012 07:48

Crude oil recently entered into a period of seasonal strength. What are prospects this year?

EquityClock.com notes that West Texas Intermediate (WTI) crude oil prices during the past 20 years have a period of seasonal strength from the middle of February to the end of July. Average gain per period is 7.5 per cent. The seasonal “sweet spot” is from the middle of February to the end of May. Average gain per period was 6.0 per cent.

Strength in WTI crude oil prices during the “sweet spot” is related to rising seasonal demand triggered by a recovery in the economy following the slower winter season. Notable gains are recorded by the transportation, construction and auto sectors. Once again, demand by these sectors is expected to rise this spring, particularly in Canada, United States, Japan, China and India.

Crude oil prices during the “sweet spot” this year are expected to be impacted by several special events that have limited supply. The price of Brent crude oil has jumped more than 14 per cent since mid-December despite a gain of only 8 per cent by WTI crude oil. Brent prices have responded to a decision by European buyers to switch from production from Iran to other sources including North Sea oil. Rising Brent prices slowly, but surely, is filtering back to WTI crude oil prices.

Concern about political instability in the Middle East also is an influence. Iran has threatened to close the Straits of Hormuz if attacked. International concerns about Iran’s nuclear program likely will continue to escalate this spring. On Wednesday, Iran denied a rumor that oil shipments to six European nations had been halted due to recent plans taken by European nations to discontinue purchases of crude oil from Iran by July.

On the charts, the technical picture on WTI crude oil prices is positive and improving. Intermediate trend is up. Support is at $95.44 and resistance is at $103.74. Crude oil recently bounced from near its 200 day moving average at $94.59 and broke above its 50 day moving average at $99.32. Short term momentum indicators are recovering from oversold levels. A break above resistance implies intermediate upside potential to $112.75 per barrel.

Investors can participate in seasonal strength in crude oil directly or indirectly. The direct method is to accumulate futures and Exchange Traded Funds that track the price of crude oil. The best known and most actively traded Exchange Traded Fund is United States Oil Fund LP (USO $39.18). In Canada, Horizons offers several currency-hedged Exchange Traded Funds trading in Canadian Dollars that are directly related to crude oil futures. The indirect way to invest in crude oil is in “oily” stocks.

oil

oil seasonal

 

Don Vialoux is the author of free daily reports on equity markets, sectors,

commodities and Exchange Traded Funds. . Daily reports are

available at http://www.timingthemarket.ca/. He is also a research analyst for

Horizons Investment Management Inc. All of the views expressed herein are his

personal views although they may be reflected in positions or transactions

in the various client portfolios managed by Horizons Investment Management.



Energy & Commodities

BC's New Bakken Generating Huge Profits

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Posted by Nick Hodge - Energy & Capital

on Thursday, 16 February 2012 11:44

Horn-River-homepage

For awhile now, North American oil has been all about Alberta and the Bakken.

Natural gas has been all about Haynesville and the Marcellus.

The amount of energy coming out of those locations is undeniable, the media attention and related stock appreciation are warranted.

And they're undoubtedly helping us lessen our dependence on foreign oil, albeit with much work left to do.

But in the northeast corner of British Columbia, near the border with Alberta, another North American energy story is taking shape. And just as with the others, the first in stand to make the most.

 

....read more HERE



Energy & Commodities

Iran cuts oil exports to Europe

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Posted by News 24

on Wednesday, 15 February 2012 09:27

Screen shot 2012-02-15 at 8.30.24 AM

The move comes days after Iran's Oil Minister Rostam Qassemi said Tehran could cut off oil exports to "hostile" European nations as tensions rose over suggestions that military strikes are an increasing possibility if sanctions fail to rein in the Islamic Republic's nuclear ambitions.

Iran argues that the EU oil embargo will not cripple its economy, claiming that the country already has identified new customers to replace the loss in European sales that account for about 18% of Iran's exports. 

Members of Iran's parliament have been discussing a draft bill, although not finalised, which would cut off the flow to the European Union before the latest EU sanctions on Iran go into effect this summer.

Iran has said it is forced to manufacture nuclear fuel rods, which provide fuel for reactors, on its own since international sanctions ban it from buying them on foreign markets. In January, Iran said it had produced its first such fuel rod.

Iran's unchecked pursuit of the nuclear programme scuttled negotiations a year ago but Iranian officials last month proposed a return to the talks with the five permanent UN Security Council members plus Germany.

 

TSX flat amid rising commodities, Greek assurances that it can get bailout



Energy & Commodities

Oil Patch & The Multi-Billion Dollar Water Services Industry

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Posted by Keith Schaefer - Oil & Gas Investments Bulletin

on Tuesday, 14 February 2012 01:48

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There is a multi-billion dollar water industry forming before investors’ eyes in the oil patch.

It’s a huge opportunity for some great capital gains — but changing regulations, and a very attentive mainstream audience questioning business practises which have been in effect for decades, will will make it choppy water for investors.

“In 2008 there were 25 billion barrels of water handled (by the oil and gas industry) in the US—even at 60 cents a barrel it’s a multibillion dollar business,” says Jonathan Hoopes, President of GreenHunter Energy Inc. (GRH-AMEX). “With the big growth in unconventional since then, it’s likely another 5-6 billion barrels.”

 

.....read more HERE



Energy & Commodities

China's Oil Imports From Iran Reduced Again

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Posted by Mike "Mish" Shedlock: Global Economic Analysis

on Thursday, 09 February 2012 12:37

oil-barrels

 

China has stepped up the pressure on Iran in the face of Europe's oil embargo. China will reduce its crude oil imports from Iran for a third month, sources said today, as the two remain divided over payment and price terms, although they plan to meet again for talks as early as this week.

 

China is the top buyer of Iranian oil and also the fastest expanding major oil importer, putting it in a strong position to negotiate for better terms after it more than halved imports for both January and February.

The reductions for March-loading supplies will be largely the same, if not deeper, than the previous two months, industry officials with direct knowledge of the supply situation told Reuters.

 

China, which buys around 20 percent of Iran's total crude exports, cut its January and February purchases by about 285,000 bpd, just over one half of the total average daily amount it imported in 2011.

 


Spotlight China: Electricity Consumption Drops Sharply; Central Bank Vows Housing Support; Asia Real-Estate Bull Turns Bearish HERE

 



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