Posts Tagged ‘oil prices’
How the Shock in New Oil Production Could Be the World’s Greatest Scam
By Mitchell Clark, B.Comm. for Profit Confidential
“Shockwave,” “revolution,” “bonanza,” and “paradigm shift.”
These are just some of the provocative words in the Medium Term Oil Market Report-2013 that was just released by the International Energy Agency (IEA).
I don’t think I’ve ever read a more enthusiastic and fervent document from a government body in my life.
The IEA is an organization funded by 28 countries that was created after oil prices skyrocketed in 1973 and 1974. As policy, the agency doesn’t forecast oil prices.
The IEA’s executive director, Maria van der Hoven, said, “North America has set off a supply shock that is sending ripples throughout the world.” (Source: “Supply shock from North American oil rippling through global markets,” International Energy Agency web site, last accessed May 15, 2013.)
The IEA forecasts the North American oil supply will grow by 3.9 million barrels of oil per day (mbopd) from 2012 to 2018. That’s significant.
Chart Industries, Inc. (NASDAQ/GTLS) out of Garfield, Ohio is an oil and gas storage manufacturer that was recently featured in these pages. (Read “This Is an Investment Theme Worth Paying Attention To.”)
But the biggest gain of all, according to the IEA, will be in global oil refining capacity, which is expected to surge by 9.5 mbopd over the next five years, led by China and the Middle East.
The report said that higher oil prices over the past few years provided the backdrop for the “revolution.” Lofty oil prices helped make fracturing technology (used to extract oil from under rock) and Canadian oilsands production economically viable.
What’s most interesting (and worrisome) is that the report said the supply “revolution” … Read More
No Time to Relax, More Significant Correction May Be in the Works
By George Leong, B.Comm. for Profit Confidential
The stock market came off its worst week this year; but even given the minor correction, I don’t think we can relax enough to re-enter the market and buy, based on my stock analysis.
I think there could be a more significant market correction down the road that could shave another five percent off the current levels.
Yet even so, the selling over the recent sessions have driven the key stock indices down to levels that are more realistic compared to levels at the end of the first quarter, according to my stock analysis.
Simply put, the previous rate of the advance was not sustainable.
My stock analysis shows that with April coming to an end, we could also be seeing the final leg of the current six-month bull cycle from November to April that has historically resulted in the best gains, according to the Stock Trader’s Almanac.
This doesn’t mean that stocks are not worth a look for the next six months. But if the historical cycles pan out, the best gains may have already been made, so it will come down to stock selection, according to my stock analysis.
Let’s take a look at the investment climate at this juncture.
What’s critical right now is the first-quarter earnings season. So far, with about 104 S&P 500 companies having reported, the results have more or less been in line with the previous quarters, with about 67.3% beating earnings-per-share (EPS) estimates, according to Thomson Financial.
Another 170 S&P 500 companies are reporting this week.
Of the 20% of the S&P 500 companies that have reported, the results … Read More
Keeping It Rolling—U.S. Energy Boom Good News for Railroad Stocks
By Mitchell Clark, B.Comm. for Profit Confidential
Railroad stocks as a group have returned to their 52-week highs. I like Union Pacific Corporation (NYSE/UNP) and Canadian National Railway Company (NYSE/CNI). They are the strongest of the group and are trading right at their all-time record highs.
These two companies are worth accumulating when they’re down. According to history, they are typically not down for long. Wall Street keeps edging their earnings estimates higher for 2013 and 2014. Railroad stocks are pretty good with their guidance.
Bakken oil (and natural gas) is a huge opportunity for the U.S. economy. The production boom is happening now, with all its benefits, disadvantages, and costs. But a lot of junior oil stocks playing this patch aren’t moving upward in the stock market in the face of weak oil prices. The Bakken oil boom itself is a counter play on rising prices.
Phillips 66 (NYSE/PSX), a real winner since being spun off from ConocoPhillips (NYSE/COP), recently announced it will ship Bakken oil from North Dakota to New Jersey by rail. According to the Association of American Railroads, in 2008, U.S. Class I railroads originated 9,500 carloads of crude oil. In 2011, the number was 66,000 carloads. The final number for 2012 is expected to exceed 200,000 carloads, and railroads are also expected to deliver large amounts of frac sand to drill sites. This is a seriously good trend for railroad stocks. The stock chart for Phillips 66 is featured below:
Chart courtesy of www.StockCharts.com
Of course, the Bakken oil boom has its consequences, and we’re not even talking environmentally. Make no mistake: big oil is not interested in U.S. energy independence. Its … Read More
Government Motors: How to Run a Business into the Ground—and Get Paid for It
By Mitchell Clark, B.Comm. for Profit Confidential
“Here’s what’s new about GM’s Strategy this year: Nothing. Our 2003 plan is the same as 2002.” This quotation was taken from General Motors Company’s (NYSE/GM) annual report in 2003, and it says a lot about what would become of the automaker. Governments have always helped the automakers, but looking back, it’s still flabbergasting to think of the amount spent in government bailouts.
General Motors (GM) is now worth $38.0 billion after receiving government bailouts and re-listing on the stock market. The company’s numbers come out in late April, and Wall Street analysts expect a three-percent gain in revenues. Ford Motor Company (NYSE/F) has a similar outlook (no government bailouts, but it got a line of credit instead). Chrysler is now owned by the Italian automaker, Fiat, which also makes “Ferraris.”
The first vehicle I drove was my father’s Ford “F-100,” the sixth-generation F-series pickup truck produced between 1973 and 1979. Being 12 years old and living in the countryside, it was fun wreaking havoc in fields and on gravel roads. When I got my driver’s license, we used to go to the drive-in theater, back the truck into a spot, and sit in the bed on lawn chairs to watch the movie. It was the ultimate “redneck” experience. I miss those days, for sure; they were the best.
My next vehicle was a clapped-out 1979 Jeep “Grand Wagoneer,” made by American Motors Company. Chrysler bought that automaker in 1987. I loved that Jeep. Both the truck and Jeep were reliable. The only problem they had was that they rusted out early—and bad, too. My Jeep had rust holes … Read More
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