MARKET ROUNDUP | |
Dow | +38.97 to 18,039.37 |
S&P 500 | +3.69 to 2,108.89 |
Nasdaq | +5.82 to 5,082.51 |
10-YR Yield | -0.10 to 2.38% |
Gold | -$5.60 to $1,181.10 |
Crude Oil | -$0.78 to $60.64 |
Everyone keeps talking about supply, supply, supply when it comes to energy. But what about demand? Ignore that, and you’ll fail to understand why gasoline futures just jumped to an eight-month high, and why crude oil is knocking on the door of its own major breakout.
Look, day after day, incredulous analysts go on CNBC and talk about how energy shouldn’t be rallying. They point to OPEC’s decision to hold its production quota at 30 million barrels per day, the still-elevated level of U.S. production, and other factors. Then they confidently predict a renewed collapse in oil, gas and natural gas prices.
But they’re missing important development on the demand front. Like today’s news that the International Energy Agency just boosted its global oil demand growth forecast.
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Demand for gasoline is on the rise, especially in the U.S. |
The agency that advises energy consuming nations worldwide now expects 94 million BPD in demand in 2015, up from 92.6 million BPD in 2014. That equates to a 1.4 million BPD jump in demand, up 300,000 BPD from the IEA’s previous forecast. The agency cited increased gasoline demand and improved economic growth for the bullish revision.
Speaking of demand, gas usage is climbing sharply here in the U.S. It just rose another 1.1% to 9.39 million BPD – the highest level since August 2010.
Refiners are responding by running flat out. They were operating at 94.6% capacity in the most recent week, the most since December. Gulf Coast refiners alone are sucking up the most crude oil and other production inputs since the Energy Information Administration started collecting the data in 1992!
You can see the impact this is having on gasoline here in the chart. It shows that wholesale futures just broke out from their recent range above technical resistance near $2.10 (the horizontal line). Key moving averages are turning higher, confirming recent strength.
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Wholesale gasoline futures are breaking out from their recent range. |
If you believe, like I do, that rising product/output demand and prices will translate into rising raw material/input demand and prices, then it’s only a matter of time before crude oil follows suit. Heck, just to “catch up” with gasoline, crude would need to climb to the mid-to-high-$70s.
Bottom line? I wouldn’t be betting against energy here. I’d be taking advantage of the biggest bargains in more than three decades, buckling my seatbelt, and getting ready for one heck of a potential ride!
So that’s my take. What’s yours? Did you know that gasoline demand was surging? Or that global demand growth is forecast to be even stronger than expected? Or is that message getting lost because of the obsessive focus by some analysts on supply? What do you think it will mean for oil prices in the coming weeks and months? Let me know at the website when you have time.
Our Readers Speak |
Meanwhile, what should the U.S. do in the Middle East? It’s not an easy question to answer, but many of you tried in the wake of the news yesterday that we’re sending even more troops to Iraq to help in the fight against ISIS.
Reader Frebon said: “We should completely withdraw from Iraq and stop all aid. This will force Iran, who cannot tolerate a radical Sunni country bordering it to the west, to engage ISIS. It will strain Iranian resources to the breaking point and may even cause the regime to topple. No matter who wins, ISIS or Iran, we win. Then with a new President we can actually decide on policy.”
Reader Richard B. added: “That well-designed Bush plan to commit to defeat the Taliban in Afghanistan with not enough soldiers … while then subduing Iraq (and sending the Iraqi army into unemployment) … turns out to be a total disaster.
“We can’t, and shouldn’t be there. It is not our fight. The Mideast has to solve this problem. We will never be on the right side of this conflict and will always be considered infidels in their territory.”
Reader Steve W. also laid the blame at the feet of the previous administration, saying: “Adhering to the adage ‘You broke it, you fix it,’ send George W. Bush, Dick Cheney, Donald Rumsfeld and the rest of the Neo-cons to Iraq to undo their handiwork. They learned nothing from history that the Middle East is a quagmire best left to the locals. Their impeccable judgment has cost the United States in lives, reputation and trillions of dollars, which would have been better spent on our deteriorating infrastructure.”
But Reader Peter said it’s the current administration that’s not up to the task of straightening out the mess. He said: “It’s all very little and way too late. Unfortunately, our president does not seem to understand the seriousness of the situation and the prospects under Hillary do not look any more encouraging. I’m afraid for the future of our country.”
Regardless of who is to blame, the reality is that we remain entangled in Mideast affairs like never before. The costs of those military and diplomatic entanglements will continue to climb, with no end in sight. If you agree, or disagree, I’d love to hear from you at the website – which you can access here.
Other Developments of the Day |
So Germany’s Chancellor Angela Merkel told Greek Prime Minister Alexis Tsipras that it was NOW time for action? After what? A half decade of talk, talk, talk on bailouts? But look now — late reports say that the fed-up IMF has walked out of the talks, finally disgusted with the Greeks. Good grief!
It’s an odd pairing – limited government activists and union officials. But they’re both lining up against President Obama’s push for the Trans-Pacific Partnership. That’s the trade deal the U.S. wants to sign with 11 other countries, but that raises several questions about secrecy, executive privilege, jobs, and more.
So do you think the Greeks and Europeans have finally ended their talks? What about the trade deal – is it good or bad policy? Feel free to comment on these or other stories over at the website.
Until next time,
Mike Larson
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{ 34 comments }
Why would Greece and other less robust countries want to have currency parity with Germany? They need to import more than export and their economies are so much weaker than Germany. The UK sees this and is only a bystander. The Euro is Germany’s way of getting even for 2 world war losses.
Both fear and lack of trust are the headwinds that Greece faces. They know it is rigged but fear the alternatives. The common currency gives German output an enormous market in which to sell its goods. All of this can only fall apart for Greece. The timing is less certain.
I followed your advice and bought OIL. It went down. I sold. I lost money.
I followed your advice and bought BEP. It went down. I’m about to sell and lose more money.
I am not a happy camper. You may be right about energy stocks in the long term, but your timing is way off.
David,never mind what is said,just watch the charts,they don’t lie.(not yet anyway)
Oil and oil based stocks is never a traders market it is more of a long term market. For instance my latest working interest was due for production in June but considering the ridicules price of oil and gas it has been postponed until the WTI reaches 60. Jut hurry up and wait!
I did not agree with your call for inflation based on increasing junk bond spreads (!) but I do agree with your call today on gasoline futures. That is a good chart for a couple of weeks. I might just go buy a few.
I like the Headline, “… Here’s How to Profit …”
Did I miss the explanation on how to profit? Is he recommending refiners or?
Just asking…..
WOW, “the fed-up IMF has walked out of the talks, finally disgusted with the Greeks. Good grief!” Yea, finally , somebody managed to talked down at the almighty IMF. The IMF was created for the sole purpose to protect the creditors, the banks. Every country that borrowed funds from the IMF , has been totally destroyed, financially and culturally. They always create a humanitarian crisis. The IMF should be dismantled
I do agree with your call Mike on all facets of energy. To bet against it is to bet against progress which the world is experiencing full throttle at this point regardless of daily headlines. There will ALWAYS be unexpected news releases to the masses concerning gas, oil, shipping, pipelines etc. along with the exposed truths as todays international Energy Agency projections. Only those outside of the industry will be surprised.
The real trick though is the timing of stock buying and since there are so many new factors involved I have settled back to a tried & true method of doing the homework, making the choices and buying that stock on extended lows and within 10 days into mild gains while cross comparing reasonable expectations with WEISS, CNN, ZACKs & ARN.
So China has one Pacific trade organization, and the U.S. wants another version. Did our fools ever think of maybe trying cooperation with their fools instead of opposition for once. We couldn’t win in Vietnam or Afghanistan; do we really want a war with China?
Three comments:
1) Early call on energy stocks-all the cited tickers show losing year, Y-T-D, & looks like the rebound cited, based on demand not supply, while interesting & valid, omits the market-manipulation that has suppressed the prices of these stocks. To ignore the “cartel” now including China, Russia, Iran along w/the MiddleEast Saudi, Qatar, Libya et al is to bury our collective head in the sand. Will energy demand continue to accelerate? Sure! Will energy company prices eventually rise? Sure. Can one tolerate continuing stock losses? Individual decision. As a contrarian like your analysis, just not your timing.
2) IMF, like our FedReserve(printing $4trillion in worthless currency while suppressing interest rates @ 0% is bank-& institutional-backed fiat that will never be disbanded but should?
3) Interest rates won’t rise more than 25-50 basis points by year end. Why is everyone so sure of this?
Regarding the Mideast it is a no-brainer. The American leadership needs to decide if we are in or out. If we are in that means at least 168,000 troops must go back to Iraq (as that was the number it took during the previous administration to eventually subdue the country). If we are in for a little, then we need to be all in with no exit strategy… meaning no exit. We establish permanent military bases there and install a benevolent dictator who rebuilds the country with Iraqi oil money including housing, schools, hospitals, police and military, etc. and basically bring them back to the 21st century. Step two, sink Iran’s entire Navy and with US troops staged at their border invite them back to the table to discuss their nuclear reactor. I’m sorry, negotiation and sanctions will not solve this problem, only overwhelming strength and force will bring about the desired results. The current American leadership will never commit to such a plan; so if we are not all in, we need to be all out. All out in this case means no troops and no foreign or military aid to the entire region. Now that America is basically energy self sufficient we can safely step back and let Europe and Russia intervene in the Mideast as needed to protect their “interests”. Of course the current administration doesn’t have what it takes to do this either, so plan on continued less than half measures in all forms that are destined to fail.
I am overseas at the moment and the U.S. is perceived as in decline with the prospect of either Hillary or Jeb for eight years. What a leadership vacuum these two present. My money is safer overseas. Look at where the big money is investing and what assets the big banks are buying as a guide.
It’s summer time gas always goes up but will it after summer that’s the question. Is deflation still alive and well will see .the leaders of the u.s. r making all the wrong call. This country is going down what a shame MI going too right a song.u ever here Jesus take the wheel. It will be like that but with our country in mind hope to have that sweet thing singing it by the end of the year.
As to the mess in the Mideast, it should be required reading for any president, anyone who aspires to be president, or anyone in the defense sector the following 5 igtems: The Declaration of Independence, The Constitutiion ( all of it) The Bible, The Koran, and as many WORLD HISTORY BOOKS as they can, particularly Middle East History.
Drop a “bomb” on all of them or get all of our troops out of there and let the fools kill themselves.
Peter ,I agree why should we poke our noses into other peoples affiars,let them kill each other,after all they are trying to kill us
Gee, we’re going back in after winning our objective (without leaving a 25-30,000 man force to consolidate our gains and back up the Iraqui’s) and then pulled out. So all the American military (forget the billions spent) died in vain. I can’t but think of Lincoln’s Gettysburg Address, and my regard for this President makes my blood boil. I hope it does yours.
The ministers at the OPEC meeting were quoted as saying they considered $75 a barrel to be a “fair price” for oil. In that they still have the power to determine what is fair I would not bet against a rise to that level. Their strategy to crush US shale producers has not been all that successful and most of the members are hurting for cash. $75 would keep some sort of lid on shale and offshore development and get them fairly close to their minimum revenue needs.
Greece is due to pay back 3 billion loan today,friday,anybody willing to chip in,come on guys ,where is your hearts.Im broke so that lets me off the hook.
Trans-Pacific Partnership is called a trade agreement, but it’s more of a treaty. Only 5 of the 29 chapters are about trade. It’s a restructuring of 40% of the world economy negotiated in secret, with built-in provisions for changing the terms without approval of Congress and with the ability to add other nations so this could be the last agreement ever negotiated – RUFKM !! But the real outrage is that the investor-state dispute settlement (ISDS) literally surrenders part of our ability to govern ourselves, to a foreign authority. The Investment chapter is on WikiLeaks. Arbitrators who face no prohibition against conflicts of interest hear claims and have the ability to issue awards against jurisdictions (nations, states, municipalities, etc.) that have adopted laws or regulations or where there have been court rulings that an investor or a foreign company or foreign subsidiary of a domestic company can bring a claim that the jurisdiction has interfered with their ability to profit as they can elsewhere. The arbitrators can award the claimant damages for their “losses” and the awards are enforceable. They can force a jurisdiction
(meaning the taxpayers) into a choice between bankruptcy or revoking a law or regulation or court decision. The arbitrators on these tribunals are being given authority greater than the Constitution, greater than the Supreme Court – AND THERE IS NO APPEAL OF THEIR RULINGS. And to complete the sell-out, the claimant and the defendant each select one arbitrator, who are then supposed to select the third. But the claimant can refuse to approve any arbitrator agreeable to the defendant, in which case the ruling body appoints the third arbitrator. This allows for two arbitrators with massive conflicts of interest to rule on a claim. We didn’t lose a war, so why is the Obama administration with the eager support of the Republican leadership in Congress going all out – more than this administration has ever done – to get Congress to give up it’s authority to amend this agreement? And then to approve it. And why would members of Congress give up their authority and approve the elimination of their ability to amend this agreement after it is made public? It doesn’t overturn US laws or regulations directly. It does it through bankrupting jurisdictions. No we didn’t lose a war, but this agreement surrenders part of our sovereignty – our ability to govern ourselves – to corporate rule outside of the US. Basically, it is treason. It can be stopped, but this is a battle for the survival of American democracy. If nearly everyone – literally nearly everyone – gets outraged over this and lights up Congress, they will stop it. The left and the right have joined in opposition and it’s close. When Obama tells us we need trade and a trade agreement we have to tell him, then tell him to negotiate a good trade agreement – not a disguised treaty that gives foreign entities the ability to overrule US laws and regulations.
With Laurel and Hardy directing the keystone cops in the White House, none of the current issues facing the United States will ever be resolved. From A to Z they have made an absolute mess of everything. America may be able to survive this administration full of academic socialist but not if the voters do not get their heads on straight and vote for what’s good for America and stop voting just for Santa Claus.
Too late. It’s every man-woman for themselves and to heck with the Country! Approval of Socialist policies is actually rising in most polls.
The Iraq problem mainly started within the Bush Administration. VP Mr. Cheney was the leading problem. He and Mr. Bush was hell bent on Iraqi oil grab. Both knew there wasn’t any WMD in Iraq but needed an excuse to invade and grab all the oil. Dick Cheney and his CIA cronies came up with the WMD cover story to get in with America’s blessings. You see, Cheney knew that in order to make the oil grab successful you had to piss off the American people to get them to say “toro toro toro!” Bush and Cheney laugh all the way to the bank! While Saddom Hussan was President the country stayed solvent and kept the enemy at bay. There were no ISIS or Ben Laden terrorising the Mid-East. By killing a solvent President as we did, The US violated the Geneva Convention rules on not targeting to kill a standing solvent President. There would be no mid-east war involving the US right now if we had choose to do the right thing.
Our government still has no clue about what course(s) of action to pursue in the Middle East. Considering all of the resources that are available to get a solid understanding of this part of the world, it’s beyond embarrassing!
Look for oil to trade in narrow range until Obama’s “give away” treaty with Iran is finalized. Then look for Iran to unload an amazing amount of oil on the market which will cause prices to plummet. Iran is basically broke with all the killing they are paying for in the mid-East and will sell at any price. Watch then for a take over/wipe out of Saudi oil fields. Price will then sky rocket. Great opportunity to make some real money.
Strong Demand Driving Gasoline, Crude Oil Prices! Here’s How to Profit …
What a bunch of BS. Americans are tired of being “f==ked with” regarding where their pay check goes, no matter the oil profits or how gained. You who gain would be met by lynch mobs if a mass of people knew you. How figured?
When the NYSE pulled its garbage on barrel of oil years back, and KPFA went to investigate, OIL FUTURES was outright asked, why are you doing this? Answer, “BECAUSE WE CAN”. NO conscience? Then I have none either. Sentence is death.
Hey guys, just tell the American people to go f==k themselves in what you are robbing them salary. That is what you are telling fellow citizens. No better than nation’s capitol NOT getting bills passed for America’s good. GO F==K YOURSELF. Are you guys actually this sociopathic psychotic? I would personally break your damn neck if in NY area. Why? You are a parasite. Your family simply ceases having you, tough. You are scum that does not care how many people across the nation are made hurt because their machine use designed to use this fuel. How do you think you would fare toward a lynch mob?
NO, I am not crazy stating this. How figured? How many people did Wash DC convince to go middle east and hurt/kill people? Politics gave godly power to Americans to go do this? Hurt/murder people in other land who are not threat? Was allowed by US politics? Who does Wash DC dare to think it is? Not powerful people. Just delusional.
So, how many you Americans are beyond asleep at switch what you are doing? You allow selves to be conned into paying ludicrous price of fuel that is in oil glut? Means you are not taking stand to rebel. I bring up this issue in area I live and watch how people react. Most are brain dead puzzled. They are not much used to actual thinking. Now put that to national level. Why we who speak up scare you to death and no problem watching how many prefer to act like nothing a problem. Mezmorized.
Remember what you could have done, the next time you sing National Anthem part “and the home of the brave”. NO NOT BRAVERY. OUT RIGHT COWARDICE.
Our current president knows exactly what his scholars want him to do. They are the ones pulling his strings. Empowering Muslims to kill as many Christians as possible. He is doing just that. Look at the buildup of conflicts and the number of Christians being slaughtered.
The only nation in the mid east we should be protecting is Israel. It is the most important element for a peaceful solution In the area because it is the only nation in the area that has the historical background that inspired our own constitution. How can any power understand freedom under the teachings of the muslim religious standards?
I believe those who credit Obama for the Middle East situation are ignoring about 5000 years of Middle East history, so best to leave it as a constant, i.e. the Middle East will always be fighting each other, and hopefully without our young men. However, I believe your analisis is correct based on supply and demand. Turning off the production from the Gulf rigs and from the fracking operations must have left the refiners short on inventory, and they are now importing it from the lower priced Saudi supplies to meet the summer and possibly growing demand. The situation must be similar in other countries as demand is not really slowing down. I believe the traders who are storing low priced oil in ocean tankers have created an “artificial blockade” around Saudi Arabia, so to prevent even more cheap oil on the market by filling up all the storage capacity. Eventually demand will increase to the point where it can’t be supplied because the storage capacity is full, the gulf rigs are shut down, and the fracking operations have stopped, and price may go up to near $65. However, with Iran and Russia becoming unsanctioned suppliers, price will remain under downward pressure until the Saudi’s stabilze production at about $55. This may be the new normal for awhile.
As to the trade deal; you can’t trust ‘Nairobi Obie’, and you don’t pass a bill that isn’t available to be read. As to some of what we know of the agreement, you don’t let foreigners control things that are functions of your own sovereignty. It’s that simple.
another way, now is the time to BUY cheap equities evhryweere — those equities will translate into rich rewards for those with a long-term horizon (30-years plus) — that opportunity is very real right now in my opinion — take it or leave it.As for those trying to make a “quick buck during the coming 10-15 years, my comment is “sorry, Charlie” economic events unfolding in the Eurozone and California are not trivial — much pain will have to be endured by citizens in order to resolve these economics — that pain will take the form of either: a) devastating increases in taxes; b) tidal wave increases in inflation; or c) savage cuts in government spending — all of that stuff is going to hurt poor people the most (anyone earning less than $250,000-$300,000 annually) — however, accredited investors with resources to invest stand to win very big in the coming 30-years — the same thing happened during the 1930’s, when liquid investors bought up the US at bargain basement prices at will — the same thing is happening right now — those with world-class jobs and motivation and discipline to invest half of their incomes will be the big winners in 30-years.Now is not the time to whine about human suffering — nothing can be done to change what is coming the powers that be have chosen austerity over monetary expansion or tax increases — that’s fine with me — I can make money in any of the three scenarios described above — so can everyone else — in fact, austerity brings some distinct advantages to the table that monetary expansion and tax increases do not — I intend to exploit the expanding austerity with my full might.The future looks bright for accredited investors — everyone else should already be under cover or on the run to some safe-haven job or place to live in order to weather the economic storm that is falling upon America and the world.Watch for companies to survive and even thrive in the coming years, even while ordinary Americans and Europeans find themselves in the hardest of times austerity is the future, whether we like it or not these fiscal and monetary decisions have already been made by the people and institutions that run the world — I strongly advise that people take a long-term view and not miss this lifetime opportunity to build a vast estate in the coming decades.
If you’re going to talk surging demand for gasoline. could you lease show a chart for the last 6 months of the weekly US demand for gasoline? At the same time can you show the same chart for world demand for oil and gasoline? How is the decline of world storage of oil progressing as well? I think then we would have a better ‘feel’ for where the price of oil is going. Thank you.
You know, the more I look at this image the more I think it says I want I want I want which is infinitely more pvsotiie from a love perspective, but more sad from the standpoint of the original tagger. I love how off to the left over there someone else tagged let me check my calendar .