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Energy & Commodities

Calling Putin's Bluff

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Posted by Keith Kohl - Energy & Capital

on Wednesday, 04 January 2017 09:40

New year, same old market.

Only now we’ve finally got some momentum going in oil. Prices surged above $55 per barrel on the first trading day of the year on news that OPEC had not only agreed to a production output, but was actually going through with it.

If you’ve been watching the market the last few years, you’ll know those are two entirely different things. But the issue has finally come to a head; the group can’t afford to keep suppressing prices as it’s been doing since 2014.

By now I'm sure you've guessed that “the group” mainly means Saudi Arabia. The country’s income is tied a great deal to oil, though it’s working to reduce its reliance on the commodity as much as possible.

And the House of Saud isn’t the only oil royalty suffering at the hands of low prices...

Russia Takes a Hit

Late last year, we saw yet another OPEC meeting come and go, only this time it ended with a real decision: the group called for a global oil production cut.

For the first six months of 2017, 1.2 million barrels per day will be cut from various OPEC members’ production levels, not including Libya and Nigeria, which had already seen production decreases due to unrelated circumstances over the past year.

The vast majority of this is, predictably, coming out of Saudi Arabia’s share, and will still leave the country with production levels above 10 million barrels per day if it cuts from its record December numbers.

But it’s not just OPEC that’s participating in the cut. The group stated that it would only agree if other non-members were to join it in reducing output, and several countries hopped on board.

image-1-putin-eacOne of these was Russia, another top global oil producer. Putin has long been a supporter of a production cut and has been a notable part of many of the past year’s meetings on the subject.

Taking a look at his country’s finances, it’s no wonder why.

Russia’s economy, much like Saudi Arabia’s, is largely tied to oil exports. In 2014, the country’s export revenues amounted to $449 billion. That number dropped 33% to $331.5 billion in 2015.

More than half of the country’s exports are tied to oil, including crude oil and refined petroleum products.

When oil prices were cut to less than half of their 2014 highs, Russia lost a huge chunk of its income all at once. It’s been dealing with the effects of this loss ever since.

In 2015, the country ran on a budget deficit of nearly $25 billion, 2.5% of its GDP.

Even though earlier expectations called for the 2016 deficit to be smaller, the latest numbers are estimating that it grew to between 3.5% and 3.7% of GDP instead.

This was due to one major mathematical flaw:

"Our budget will be balanced when the price is $82 per barrel, so there are still a lot of decisions to be made when it comes to budget policy," said Russian Finance Minister Anton Siluanov in January last year.

With prices bouncing around $40 for most of the year, $82 was really a stretch. Even Business Insider’s recalculation that the country could at least break even at $68 per barrel was a bit much to hope for, considering we’re only just now entering the real recovery.

Will It Cut?



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Energy & Commodities

Short Term Update on Miners

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Posted by Gary Savage - Smartmoneytracker

on Wednesday, 04 January 2017 09:13

We have a fairy bullish setup with a weekly swing, right translated weekly cycle and a rally that should persist for a minimum of 5-8 weeks.

 

https://blog.smartmoneytrackerpremium.com/



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Energy & Commodities

Richard Wyckoff: Logic Not Working, This Maybe Why? Part II

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Posted by Readtheticker.com

on Friday, 30 December 2016 08:16

Screen Shot 2016-12-30 at 7.05.34 AMRichard Wyckoff - logic has rules, some folks like the short cuts, hence they wonder why their trade ends in a mess.

Previous Post: Richard Wyckoff logic not working, this maybe why?
Part 1

Investing Quote...

"Without specific, clear, and tested rules, speculators do not have any real chance of success." ~ Jesse Livermore

"If you have trouble imagining a 20% loss in the stock market, you shouldn't be in stocks." ~ John (Jack) Bogle

"The stock market is filled with individuals who know the price of everything, but the value of nothing." ~ Philip Fisher

"I buy on the assumption they could close the market the next day and not reopen it for five years" and "Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell." ~ Warren Buffet

"My experience has been that in successful businesses and fund management companies, which performed well over the long-term, some courageous decisions were taken. Courageous fund managers reduce their positions when markets become frothy and accumulate equities when economic and social conditions are dire. They avoid the most popular sectors, which are therefore over-valued, and invest in neglected sectors because being neglected by investors they are by definition inexpensive. The point is that it is very hard and that it takes a lot of courage for a fund manager to avoid the most popular sectors and stocks and to invest in unloved assets. Finally, every investor understands the principle 'buy low and sell high', but when prices are low nobody wants to buy." ~ Marc Faber

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Energy & Commodities

U.S. Shale Is Now Cash Flow Neutral

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Posted by Oilprice.com

on Friday, 23 December 2016 06:53

Oil prices are probably already high enough to spark a rebound in shale production.

The IEA says that in the third quarter of 2016, the U.S. shale industry became cash flow neutral for the first time ever. That isn’t a typo. For years, the drilling boom was done with a lot of debt, and the revenues earned from steadily higher levels of output were not enough to cover the cost of drilling, even when oil prices traded above $100 per barrel in the go-go drilling days between 2011 and 2014. Even when U.S. oil production hit a peak at 9.7 million barrels per day in the second quarter of 2015, the industry did not break even. Indeed, shale companies were coming off of one of their worst quarters in terms of cash flow in recent history.

That all changed around the middle of 2015 when the most indebted and high-cost producers went out of business and consolidation began to take hold. E&P companies began cutting costs, laying off workers, squeezing their suppliers and deferring projects that no longer made sense.

By 2016, oil companies large and small had shed a lot of that extra fat, running leaner than at any point in the last few years. By the third quarter, oil prices had climbed back to above $40 and traded at around $50 per barrel for some time, replenishing some lost revenue. That was enough to make the industry cash flow neutral for the first time in its history.

lo



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Energy & Commodities

Indexing Marijuana’s Monster Growth

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Posted by Daniel Collins Editor in Chief Modern Trader

on Thursday, 22 December 2016 06:45

To be a legitimate market sector, you must have a benchmark to measure what qualifies as under- and over-performance.

A large debate that has grown in investing circles during recent decades is the ability for professional investors to provide “alpha” rather than simply “beta.” That they are adding value rather than just collecting the value provided by the broad market or a specific sector. Legitimate market sectors draw investors and those investors are being asked to prove their value not only versus the broad market but versus the particular sector or strategy group they are involved in. 

So, if an emerging industry is going to attract professional investors, it will be asked to measure its performance versus a benchmark. The Marijuana Index, which is owned by MJIC, tracks the performance of the legal marijuana industry. This includes companies that directly handle legal marijuana, such as marijuana producers, processors, distributors and retailers. It also includes companies that don’t directly handle plant product, but cater to those who do, as well as to consumers. These “ancillary” businesses operate in a wide range of industries such as consumption devices, product packaging, information technology, equipment, business services and more, says Dan Nicholls, vice president at The Marijuana Index. “Our definition of marijuana includes all forms and applications of the marijuana, cannabis and hemp plant, including cannabinoids such as CBD or THC,” says Nicholls, adding that it does not, however, include activities related to synthetic cannabinoids.

MJIC breaks down the Marijuana Index into three indexes: The North American Index, American Index and Canadian Index (see “One plant, 3 indexes,” below). Currently there are 23 stocks in the overall index, 13 American and 10 Canadian (see “The roster,” below). MJIC recently reconfigured the index based on specific criteria. “The start of this year we revamped the index, putting in place strict eligibility criteria,” Nicholls says. 

MT January CoverStory Index OnePlant

....much more analysis and charts HERE

...related, Mark Leibovit was in on Marijuana at the very bottom and recently took "Monster Profits":

 



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