Eq: Energy

Eq: Energy (62)

Sunday, 01 May 2022 15:39

Demand Destruction and China are Destroying Oil

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Just after many Wallstreet firms were predicting oil prices to skyrocket passed $130 the jets have started to cool and oil prices are falling. Oil dipped below $100 a barrel this week and the two biggest factors are demand destruction and China’s latest Covid-19 outbreak. In the U.S. the Ukraine war and high gas prices are deteriorating the demand for commodities and demand is beginning to weaken which in turn affects energy prices. Demand will drop by 1.4 million barrels a day according to Rystad Energy. Additionally, the U.S. is a strong dollar is making it hard to purchase oil-backed goods abroad. China’s lockdown in Shanghai drastically reduces global demand and could be a threat in the intermediate future. If Bejing follows suit it could be devastating.


Finsum: Oil investors should watch out for Russia, which is starting to feel the pressure on its economy.

Wednesday, 20 April 2022 19:36

Natural Gas Surges to Over Decade High

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Oil has been dominating headlines but natural gas prices skyrocketed to a t 13 year high on the back of Russia’s war on Ukraine. To add to the fodder temperature forecasts for spring are remarkably low which means homes will be utilizing more natural gas in order heat homes. Overall prices are $8.05 per million British thermal units and are up 108% through the year already. Financial markets aren’t sure this price increase is permanent and Citi has only raised their end price target to $4.60 by the end of 2022.


Finsum: Keep an eye on natural gas bonds as just like oil surging, it could mean good things for companies ability to repay.

Monday, 18 April 2022 19:57

U.S. Ramping Up Oil Production

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Oil prices have begun to stagnate just a hair, but they are still high enough to spur lots of production. U.S. oil output is expected to be 12.86 million barrels a day according to East Daley Capital, which is a 23% increase from their December forecast. Most of the increased production will come from shale Fields in the Permian Basin, as elevated prices can sustain drilling and production here. Additionally, supply chains are relatively more lubricated, the Russia-Ukraine conflict looks ongoing, and a massive Covid resurgence seems like a small probability. The Dallas said profits are more than sustainable to continue drilling in the Permian Basin and other shale sites.


Finsum: This increased production could be enough to finally cap the upward moving gas prices, but that effect could take some time.

Monday, 18 April 2022 19:57

U.S. Ramping Up Oil Production

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Oil prices have begun to stagnate just a hair, but they are still high enough to spur lots of production. U.S. oil output is expected to be 12.86 million barrels a day according to East Daley Capital, which is a 23% increase from their December forecast. Most of the increased production will come from shale Fields in the Permian Basin, as elevated prices can sustain drilling and production here. Additionally, supply chains are relatively more lubricated, the Russia-Ukraine conflict looks ongoing, and a massive Covid resurgence seems like a small probability. The Dallas said profits are more than sustainable to continue drilling in the Permian Basin and other shale sites.


Finsum: This increased production could be enough to finally cap the upward moving gas prices, but that effect could take some time.

Wednesday, 16 March 2022 19:55

Goldman’s Bullish on These Oil Stocks

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Oil demand isn’t diminishing anytime soon, and while Russian Oil companies may suffer from sanctions and political pressure other oil companies are in a position to benefit. Goldman upgraded three oil companies that could capitalize. The first is Diamondback Energy from Texas; they have strong production and great revenues/earnings. Next up was Ovintiv which moved from Canada to the US two years ago but also has strong revenues and a half dozen consecutive quarterly gains in earnings. Rounding out the bunch is Hess which is a hydrocarbon extraction company which will benefit from the elevated prices in its shale search.


Finsum: These options look promising, remember fringe producers really benefit the most on the margins from elevated prices.

Monday, 14 March 2022 20:38

Global Oil Surge Puts ESG on Backburner

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ESG and other socially conscious investing is all fine and dandy when energy prices are modest, however the sharp spike in energy has many reorganizing their priorities. There was already an upward trajectory pre-Russian invasion due to OPEC+ supply constraints but that has escalated with Biden’s latest sanctions. The war is putting pressure on key commodities that are slowing many green energy initiatives and renewable policy proposals. More Americans than ever are worried about the prices at the pumps and calling for expansion in drilling to expand supply. So no matter the political pressure ESG is facing an uphill climb at the moment.


Finsum: This could put more pressure on long term green energy proposals as this crisis highlights dependence on fossil fuels.

Monday, 07 March 2022 19:06

Goldman Predicts Oil to Hit $115 a Barrel

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Goldman Sachs swiftly raised its one-month projection for Brent to $115 a barrel, a $20 price increase from their previous projection. Not only that they say there are still lots of upside risks if there is further disruption or escalation. The only thing that could hold higher oil prices off would be a complete deterioration of demand by the US and Western Europe. More sanctions are upcoming from the west as Russian banks will be banned from SWIFT payment systems. Commodities are also facing higher price pressures with both threats to payment methods for Russian goods and restrictions to Russian commodities to the wider West. On top of all of this shale supply will fail to compensate for the current demand and OPEC+ will have to step in if there is to be any relief in oil prices.


Finsum: This is a good time to by energy bonds as payment streams will surely be in supply with higher gas prices.

Monday, 28 February 2022 17:22

Biden Freezes Oil Leases With Prices at All-Time Highs

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Oil prices have been rising about as fast as any point in recent time and with Oil prices pushing close to $100 a barrel, President Biden has frozen a whole selection of new Oil leases in order to accommodate green energy policies. This all is imposed based on newly tagged costs to the ‘social cost’ of carbon emissions, attempting to quantify the costs of climate change. However, there is lots of supply price pressure due to both OPEC+ and the Russia-Ukraine tensions.


Finsum: The U.S. needs oil supply now as much as ever, companies are reopening shale drilling sites that were not thought profitable because Oil could hit $100 a barrel.

Oil prices have been rising about as fast as any point in recent time and with WTI prices pushing close to $100 a barrel, President Biden has frozen a whole selection of new oil leases in order to accommodate green energy policies. This all is imposed based on newly tagged costs to the ‘social cost’ of carbon emissions, attempting to quantify the costs of climate change. However, there is lots of supply price pressure due to both OPEC+ and the Russia-Ukraine tensions.


Finsum: The U.S. needs oil supply now as much as ever, companies are reopening shale drilling sites that were not thought profitable because oil couldn’t hit $100 a barrel.

Tuesday, 15 February 2022 19:11

Coal: The Resilient Energy to Keep an Eye On

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Coal is the forgotten younger child in the fossil fuel categories and in the age of ESG that has been exacerbated. Demand in the U.S. and Euro area has fallen drastically. For example, it's about half what it was a year ago in the U.S., However coals price has steadily grown as it averaged $168 per metric ton in January which is higher than $119 from all of 2021. What's driving that price increase is the shift in usage from West to East. Coal power is expected to grow by 4.1%, 11%, and 12% in China, India, and SEA respectively over the next three years. In many ways, it was the only available energy in developing countries and has prompted changes in supply chains in both Russia in Indonesia.


Finsum: Just because the U.S. has forgotten about coal doesn’t mean it won’t be a critical part of energy production in the next decade.

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