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THE U.S. SHALE OIL INDUSTRY: Swindling and Stealing Energy To Stay Alive

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Posted by Steve St. Angelo - SRSRocco Report

on Wednesday, 27 December 2017 06:27

While the U.S. Shale Energy Industry continues to borrow money to produce uneconomical oil and gas, there is another important phenomenon that is not understood by the analyst community.  The critical factor overlooked by the media is the fact that the U.S. shale industry is swindling and stealing energy from other areas to stay alive.  Let me explain.

First, let’s take a look at some interesting graphs done by the Bloomberg Gadfly.  The first chart below shows how the U.S. shale industry continues to burn through investor cash regardless of $100 or $50 oil prices:

Burn-Baby-Burn-Shale-Oil-Free-Cash-Flow

The chart above shows the negative free cash flow for 33 shale-weighted E&P companies.  Even at $100 oil prices in 2012 and 2013, these companies spent more money producing shale energy in the top four U.S. shale fields than they made from operations.  While costs to produce shale oil and gas came down in 2015 and 2016 (due to lower energy input prices), these companies still spent more money than they made.  As we can see, the Permian basin (in black) gets the first place award for losing the most money in the group.

Now, burning through investor money to produce low-quality, subpar oil is only part of the story.  The shale energy companies utilized another tactic to bring in additional funds from the POOR SLOBS in the retail investment community… it’s called equity issuance.  This next chart reveals the annual equity issuance by the U.S. E&P companies:



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Energy & Commodities

(Some) Commodity Charts are Breaking Out

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Posted by Rambus Chartology

on Friday, 22 December 2017 09:42

Tonight I would like to update some charts for the commodities complex as we are starting to see some action in this sector. Back in the summer months when we first started to get long some of the different commodities sectors, we got many breakouts from some very nice H&S bases. After the initial move up came the first consolidation phase that has been going on for nearly four months or so. We are now starting to see some of these consolidation patterns breaking out which should lead to the next impulse move higher in most cases.

Lets start with BHP, one of the biggest miners on the planet, that shows a good example of where we are at in the bull market. Today the price action broke out with a gap above the top rail of an almost 5 month triangle consolidation pattern. A backtest to the top rail would come in around the 43.50 area.

BHP-DAILY-1

 

Now lets look at a long term weekly chart which shows some classic Chartology. We have discussed many times in the past when you see a small consolidation pattern form just below an important trendline, in this case the neckline, and one above, that is usually a very bullish setup which BHP is now showing.

Also keep in mind the size of that double H&S bottom that took three years to buildout. Big patterns lead to big moves. The minimum price objective of that double H&S bottom is measured from the head straight up to the neckline # two. Add that distance to the breakout point to get your minimum price objective.



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Energy & Commodities

Crude problem for Canada

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Posted by Futures Magazine

on Thursday, 21 December 2017 07:00

The Canadian dollar could be about to take a plunge. Not only did the Bank of Canada recently pour cold water on further rate hike prospects, but there is also the problem of crude oil. The black stuff got sold off today in response to the latest U.S. oil inventories data which showed a big rise in stocks of gasoline. But that’s not even half of the problem. The problem is actually in Canada itself, where crude oil is being sold at a significant discount to the rest of the world. Canada’s benchmark oil, called the Western Canada Select is trading at a $26.50 discount to WTI. That’s almost a 50% discount given the current price of WTI being about $62.50 per barrel. Canada has its oil production concentrated in Alberta and there are no pipelines to ship the oil to the cost. Consequently, nearly all its crude is piped to its only customer – the U.S. – where it is refined into various oil products. But thanks to the shale oil revolution, the US is fast becoming self-sufficient in its energy needs. So it relies increasingly less on crude imports. As a result, a huge glut has been built up in Canada. This could prove very costly for the Canadian economy and therefore its currency.

800x-1

....also from Michael Campbell: Paucity of Pipelines Cost Canada $72 Million a Day

AUD/CAD about to stage a significant comeback?



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Energy & Commodities

This Global Index Is Screaming Higher

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Posted by Matt Badiali - The Edelson Institute

on Monday, 18 December 2017 06:52

There is good news for natural resource investors out there. The Baltic Dry Index (BDI), which is a benchmark of shipping rates around the world, hit a four-year high.

The BDI tracks shipping of grains, oil seeds, coal and iron ore. These are fundamental components of the global economy. So, when the cost to ship those goods goes up, it means the global economy is improving.

And that’s great news for natural resources.

The Global Economy

You can see what I mean in the chart below:

121417 2024 ThisGlobalI1

The BDI hit its highest point since 2014 on a strong move up since July 2017.



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Energy & Commodities

WORLD SILVER PRODUCTION: 3 Charts You Won’t See Anywhere Else

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Posted by Steve St. Angelo - SRSRocco Report

on Monday, 18 December 2017 06:38

The rate at which global silver production increased over the past century is quite astonishing.  When Columbus arrived in America (1492), the world was only producing 7 million oz of silver a year.  Today, the world’s largest primary silver mine, Fresnillo’s Sauicto Mine, produced three times that amount in just one year (22 million oz, 2016).  Yes, we have come along way in 500 years.

Just think about that for a minute.  One silver mine last year produced three times the global amount in 1493.  According to the U.S. Bureau of Mines 1930 Report on Summarized Data of Silver Production, the average annual silver production in the world from 1493 to 1600 was 6.9 million oz (Moz).  If we look at the following chart, we can see how world silver production increased over the past 500+ years:

World-Silver-Production-1493-2017f-Avg-Annual

As we can see, average annual world silver production increased from 6.9 Moz during 1493-1600, to 13 Moz from 1600-1700, 18 Moz from 1700-1800, 51 Moz from 1800-1900, 274 Moz from 1900-2000 and a stunning 722 Moz from 2000-2017.  Again, these figures represent the average annual silver production for each time period.

In the current period, 2000-2017, the world has produced 103 times more silver per year than from 1493-1600.  However, the next chart shows the total silver production for each period.  From 1493-1600, the world produced a total of 747 Moz of silver, compared to 13,000 Moz (13 billion oz) in just 18 years from 2000-2017:



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