Each week Josef Schachter will give you his insights into global events, price forecasts and the fundamentals of the energy sector. Josef offers a twice monthly Black Gold newsletter covering the general energy market and 34 energy and energy service companies with regular updates. He holds quarterly subscriber webinars and provides Action BUY and SELL Alerts for paid subscribers. Learn more and subscribe.
EIA DATA: The EIA reported last week a big decline in commercial crude stocks of 10.0Mb and WTI oil prices lifted. This bounce is not justified! In our view the data was neutral to bearish for the most part: US Production rose by 200Kb/d to 12.5Mb (a new all time high) as new Permian pipelines opened, and shut-in production is now coming on stream. More volumes should be coming over the next weeks and months as more pipelines come on before year end. It would not surprise us to see US production exceed 13.0Mb/d by Q4/19. The reason for last week’s draw was that net imports fell by 1.5Mb/d or 10.5Mb on the week with imports declining 1.29Mb/d and exports rising 216Kb/d. Demand was strong as the last big weeks of the summer driving season were underway. Demand for all products rose to 22.2Mb/d and gasoline demand rose 274Kb/d to 9.9Mb/d, all near their summer highs.
With two weeks left in the summer driving season, our view remains that the price of crude will falter and decline below US$50/b (US$55/b last Friday) once we see the fall seasonal build start up. The S&P/TSX Energy index, at 125 last Friday, should fall another 10% or so to the 110 or lower level into late October. Get your BUY lists ready for a Table Pounding BUY window in late October.
TRADE WAR: The trade war will escalate with the start of September, garnering a lot of attention. China has continued to devalue the Yuan and President Trump continues his battle with both China and the Fed Chairman. It will likely get very nasty in the coming weeks and be a depressant on the stock markets.
Our SER August Monthly Report came out last week and we reviewed 10 of our 34 Covered Companies and their Q2/19 results. To review these companies become a subscriber.
There are still VIP and General Admission tickets available for the SER ‘Catch The Energy’ Conference in Calgary on October 19that MRU but the VIP tickets are going fast. Please sign up ASAP to have the best chance to sit with favoured companies and their CEO’s or Officer Presenters.
CONCLUSION: Once we get into mid-September the crude inventory build will knock crude oil prices meaningfully lower. Accompanied by an escalation of the trade war and Trump attacks of the Federal Reserve, it will get quite nasty and unnerving for markets. We expect to see WTI decline below US$50/b during the month. If we have a severe stock market correction over the next two months, the next great buying opportunity should arise with the stock market capitulation. We intend to send out Action Alerts to subscribers when this happens. October can be a very nasty month for stocks and we see this year as being one for the record books.
The 2nd Annual Schachter Catch the Energy Conference will be held at Mount Royal University in Calgary on Saturday, October 19th. This is a rare opportunity for investors to learn more and interact with 26 Energy Sector CEOs. Below are the 26 companies presenting at the conference.