Author: Adam Feik

Would you take a $100 bet that gas prices exceed $4 again in 2015?

Posted on by Adam Feik

Adam Feik - INO.com Contributor - Energies


If only one could know – in advance – when oil prices would bottom… right?

Well, on Fox Business Network’s Varney & Co. Wednesday morning, a well-known expert informed us he expects gas prices to exceed $4 per gallon again by the end of the year. That’s right; in 2015!!!

“Care to put your money where your mouth is on that?” the show’s host, Stuart Varney asked, in essence (I’m paraphrasing).

Would you take the bet? The guest, former Shell Oil President John Hofmeister did! Varney, of course, eagerly and confidently took the other side.

The $100 bet

Here’s a link to the video, if you’d like to watch these 2 aspiring futurists making a $100 bet. Oh, and you’ll be able to hear Hofmeister’s logic as well (summarized later in this article for your convenience).

Mr. Hofmeister must feel pretty secure in the deal he reached with Mr. Varney, since Hofmeister appeared on CNBC the day prior, predicting (sans bet) $5/gallon gas by 2020, saying the world will need 100 barrels of oil by that time, and that “we don’t know how to get there yet.” Continue reading "Would you take a $100 bet that gas prices exceed $4 again in 2015?" →

If the oil supercycle is dead, do you believe in resurrection? Or reincarnation?

Posted on by Adam Feik

Adam Feik - INO.com Contributor - Energies


As INO’s Energies contributor, how could I ignore Saudi Prince Alwaleed’s provocative statement that oil will “never” hit $100 “anymore”? In his interview with Maria Bartiromo for an article in Monday’s USA Today, Prince Alwaleed aptly summarized key reasons for today’s low oil prices, but (importantly) he didn’t give offer any evidence that oil would “never” again reach triple digits.

Still, many are decrying the “end of the oil supercycle.” Perhaps the supercycle is dead; or perhaps not. Either way, the world still needs energy from someplace, right? And lots of it! Which path, then, does the future hold? A resurrection of the oil supercycle? Or a reincarnation of a new energy supercycle based on resources other than oil? (Or “all of the above”?).

One prominent money management firm I’ve followed for most of my investment career, WHV Investments in San Francisco, was the first to introduce me to the term “supercycle” – referring to the coming oil- and steel-intensive “industrial revolution” that kicked into high gear in emerging countries in the early 2000s. By way of background, WHV is no “closet indexer.” Its managed portfolios, rather, reflect the firm’s conviction in top-down macroeconomic themes and trends identified by its team of analysts and managers. Continue reading "If the oil supercycle is dead, do you believe in resurrection? Or reincarnation?" →

Breaking News: US Relaxes Crude Export Restrictions

Posted on by Adam Feik

Adam Feik - INO.com Contributor - Energies


The US Commerce Department on Tuesday announced it started on December 8th approving a backlog of requests to export certain, specific forms of processed light oil. Crude exports have been banned since 1975. Tuesday’s announcement doesn’t end the crude oil export ban entirely, but the department on Tuesday did also issue long-awaited guidelines “outlining exactly what kinds of oil other would-be exporters can ship.” (Reuters)

Reuters reported this new action “effectively clears the way for the shipment of as much as a million barrels per day of ultra-light U.S. crude to the rest of the world.” Ed Morse, global head of commodities research at Citigroup, was quoted as saying US condensate exports could rise from 200,000 bpd to as much as 1 million bpd by the end of 2015, thanks to this new regulatory change.

For now, exports of untreated crude remain banned. Refined fuels such as gasoline and diesel, though, have not been banned from selling abroad. The question has been at what point crude becomes “refined,” and thus eligible to be exported. “Processed condensate,” a semi-refined form of the product, has been a gray area. Continue reading "Breaking News: US Relaxes Crude Export Restrictions" →

Natural Gas Takes Its Turn At The Puke Bowl

Posted on by Adam Feik

Adam Feik - INO.com Contributor - Energies


Natural gas futures on Friday dropped below $3 for the first time since September 2012, on an intraday basis. December is now on track for the dubious distinction of producing natty’s largest one-month drop since 2008 – currently about a 26% month-to-date (MTD) decline – as producers continue churning out the commodity even while mild weather has resulted in below-normal consumption.

Crude oil, by comparison, has declined about 17% in December (MTD).

Natural gas and crude oil prices have taken turns out-dropping each other over the past 6 months. This simple graph (and accompanying chart) shows how oil and gas have crashed both together and separately for the last 6 months. What do I mean by that? Both have nosedived, but with 5 distinct periods of divergence (highlighted in blue when oil is outperforming, and highlighted in red when gas is outperforming). See for yourself:

In total:

  • Oil & gas have crashed “together” for 3 of the 8 periods, for a total of 45 trading days in which gas has generally declined more than oil.
  • Oil has “diverged” to the upside in 2 periods (highlighted in blue), for a total of 12 trading days.
  • Gas has “diverged” to the upside in 3 periods (highlighted in red), for a total of 74 trading days.

Actually, at its recent peak on Nov. 20th, natural gas prices were only a few pennies below their June 20th level; so effectively all of natty’s 2014 crash has occurred in just over 23 trading days since just before Thanksgiving.

What happened to natural gas from Oct. 28th through Nov. 20th, when it rose about 26%? Continue reading "Natural Gas Takes Its Turn At The Puke Bowl" →

Jim Cramer Finds A Diamond In The (Rough) Oil Patch

Posted on by Adam Feik

Adam Feik - INO.com Contributor - Energies


What a week for oil and energy. Okay, I know... what a 6 months! Ugh!

In case you're living under a rock (or just need a succinct summary of the carnage of late), oil has dropped about 2% or more every day this week except Tuesday, and looks on track to do so again today (Friday, Dec. 12th). All told, WTI oil prices as of mid-day today have dropped below $58, representing a decline of more than 46% since the commodity’s June 20th closing high of $107.95. In that time, natural gas prices and energy stocks have both given up about 25%, based on the US Natural Gas ETF (NYSEArca:UNG) and the Energy Select Sector SPDR ETF (NYSEArca:XLE), respectively. The Market Vectors Oil Services ETF (NYSEMKT:OIH) meanwhile, is off about 38% since oil's slide began.

Interestingly, this week's big shellacking has seen both oil and the dollar move lower, with the DXY index losing a little more than 1%. Natural gas prices are actually moving higher, and UNG's chart looks to the naked eye like this week could mark the beginning of a bottoming formation.

One small group that's bucking the trend

Last week, I highlighted Enbridge Energy Partners (NYSE:EEP), the Houston-based US affiliate of Calgary-based Enbridge (NYSE:ENB). EEP, ENB, and some other pipeline stocks have been (knock on wood) somewhat bucking the devastation in oil and energy. Accordingly, EEP and ENB continue to be among the only energy investments sporting green Trade Triangles in my MarketClub portfolio.

As fate would have it, ENB made impressively good news the last couple weeks, making a big enough splash to get the CEO invited on for a guest appearance on – wait for it – Jim Cramer's Mad Money show on CNBC. Whatever your vibe about Cramer, you ought to take 8 minutes and watch CEO Al Monaco's performance (here). Continue reading "Jim Cramer Finds A Diamond In The (Rough) Oil Patch" →