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Energy & Commodities

Venezuela on the Brink—An Opportunity for Oil Investors?

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Posted by Frank Holmes - US Global Investors

on Thursday, 03 August 2017 07:10

COMM-oppositions-demonstrators-venezuela-flag-burning-fire-07282017Venezuela is sliding closer and closer toward the brink, and things look as if they’ll get worse, unfortunately, before they improve.

A country that boasts the largest proven oilfield in the world should not be facing such dire food and medicine shortages, not to mention rampant protests and violence in the streets. But that’s what happens when far-left, authoritarian socialist regimes threaten to dissolve economic freedom, the rule of law and democracy itself.

Screen Shot 2017-08-03 at 7.08.36 AMAs you might have heard, a vote passed in Venezuela on Sunday that could permanently amend the country’s constitution for the worse. President Nicolas Maduro is now poised to become the world’s next absolute dictator.

Last Wednesday, the U.S. Treasury Department issued economic sanctions on 13 current and former Venezuela government officials in an effort to encourage Maduro to drop the election, which—let’s be honest—was likely rigged in his favor. According to Transparency International, Venezuela is among the most corrupt countries on the planet, ranking 166 out of 176 in 2016.

“We will continue to take strong and swift actions against the architects of authoritarianism in Venezuela, including those who participate in the National Constituent Assembly as a result of today’s flawed election,” the U.S. State Department said in a statement issued Sunday.

So why am I telling you this? Again, Venezuela sits atop the world’s largest proven oil patch. Crude accounts for roughly 95 percent of its export earnings. If Maduro does not relent, the U.S. could very possibly target the country’s oil industry next.

As Evercore ISI put it last week, the Treasury Department’s decision is “the first step toward comprehensive sectoral sanctions, including crude oil imports into the U.S.”

This would be phenomenally disruptive to Venezuela’s already fragile economy. Right now, the U.S. is the country’s top cash-generating market. Unlike most other markets, the U.S. pays its oil import invoices in full and on time. Venezuela could always boost exports to other existing clients, but the cash would dry up.

To be fair, such a move wouldn’t be exactly painless for the U.S. either. Venezuela is currently its third-largest supplier of crude, following Canada and Saudi Arabia. Several large American producers, including Chevron, Halliburton and Schlumberger, have joint-venture contracts with Petroleos de Venezuela (PDVSA), the South American country’s state-run oil company. And a number of oil refineries in the U.S. are equipped specifically to handle Venezuela’s notoriously extra-heavy crude.  



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Energy & Commodities

Another Major Warning That Trouble Lies Directly Ahead

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Posted by Jeffery Saut via King World News

on Wednesday, 02 August 2017 06:55

King-World-News-Former-White-House-Official-Warns-Another-Derivatives-Nightmare-Is-About-To-Shock-The-World-864x400 cJason Goepfert at SentimenTrader:  “According to the latest AAII survey, individual investors are now holding their lowest cash allocation since 2000.

....view Jason's chart HERE

 

.....also from King World News:

A Huge Clue As To Where Gold, Silver, Commodities And The Mining Shares Are Headed



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Energy & Commodities

Is A Bull Market For Natural Gas Around The Corner?

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Posted by OilPrice.com

on Friday, 28 July 2017 06:39

b15f98a9b558a3706846715be661ae95While the number of drilled but uncompleted wells (DUCs) in the U.S. oil patch is growing as producers wait for higher oil prices, the shale gas plays have seen the number of DUCs decline as drillers take advantage of higher natural gas prices this year compared to last year’s lows.

Expectations of additional takeaway capacity coming online—as well as the rebound in natural gas prices—are making drillers more confident that they will be able to sell their production at higher prices. The companies are still cautious after the downturn, but the economics of drilling an oil well and a gas well have diverged since the 2015-2016 price rout. Gas prices have almost doubled since March 2016, and drillers are hoping that a bull market is coming, analysts reckon.



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Energy & Commodities

Is Big Oil Planning Its Funeral By Ignoring The Obvious?

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Posted by Sol Palha - Tactical Investor

on Thursday, 27 July 2017 08:51

Many of the reports published that cover oil consumption and how quickly consumers will embrace Electric Vehicles (EV) paint a far rosier outlook for the future of oil than the facts dictate. The reason is simple; most of these reports tend to be written or sponsored by big oil and so they tend to be biased. We are not stating that this is the end of oil, but its glory days are probably behind it. One thing is obvious; the peak oil theory experts are and were always full of rubbish. In fact, we penned several articles over the years covering this issue the latest of which was titled “peak oil debunked”.

Factors against big oil

Battery prices are plunging 

The most expensive component in EV’s boils down to the battery. Battery prices have been plummeting at a very rapid rate. In 2016, Bloomberg noted that battery prices dropped 35%; bear in mind that was at the beginning of 2016. Battery prices have continued to plummet since then; in fact, the latest survey illustrates that battery prices have dropped 80% in just six years

EV1
Average Battery Pack Price 


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Energy & Commodities

Mining Stocks’ Extreme Signal

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Posted by Paul Rejczak - Sunshine Profits

on Monday, 24 July 2017 06:58

Briefly: In our opinion, full (150% of the regular full position) speculative short positions in gold, silver and mining stocks are justified from the risk/reward perspective at the moment of publishing this alert.

The biggest event of the previous week was the huge decline in the USD Index – the reaction of the precious metals market – especially the mining stocks – was very specific. What can we infer from the size and additional details of the metals and miners’ upswing?

Let’s take a look at the charts, starting with the USD Index (chart courtesy of http://stockcharts.com).

pr up 2017 07 24 1 IVGix6i

The USD Index broke below the late-2016 lows on Friday and there are a few things that we would like to stress. Firstly, the USD Index declined in an accelerated manner (reverse parabola), which is how the most volatile price swings end (remember the 2011 top in gold?). Secondly, the RSI indicator is the most oversold since the 2011 bottom (yes, the situation is so extreme at this point), while the fundamental picture still favors higher USD Index values (rising rates in the U.S. compared to expansive monetary policy in the EU and Japan, despite somewhat hawkish comments from Mario Draghi). Thirdly, while the USD broke through the short-term support levels, it is now approaching a long-term one – the 2015 and 2016 lows in terms of the weekly closing prices. They are just above the 93 level – about 0.6 below last week’s low. That’s only half of last week’s decline that would need to be seen for the USD to reach these key lows. In fact, just a repeat of Friday’s decline would almost be enough.

All of these factors point to a nearby reversal and the way that gold, silver, and – in particular – mining stocks have been reacting to the USD’s decline (to a limited extent) suggests that a reversal in the USD is likely to trigger a sharp decline in the precious metals sector.



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