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Schachter Eye on Energy: Crude oil retreats due to weaker demand and inventory build; more weakness ahead near term


1024x256_goldblue Schachter Eye on Energy

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 & ECONOMIC DATA: Last week’s Purchasing Managers Manufacturing Survey came in at a level of 47.8 implying a weakening manufacturing sector. 50 is considered neutral and the forecast had been for 50.4. This weakened stock prices with the Dow falling 344 points on Monday and 494 points on Wednesday as impeachment worries dampened market risk takers.  Crude oil prices retreated as well on concern of weakening economies as the trade war worsens and now moves into tariffs against the EU. The EIA reported last Wednesday that commercial stocks rose 3.1Mb which was above the consensus estimate of 1.4Mb. This growth in storage was what we have been expecting during the fall shoulder season. Demand continues to weaken with consumption last week at 20.75Mb/day down 430Kb on the week. This is also down from the summer peak of 22.4Mb. Crude prices have fallen >$3/b  over this past week to US$53/b. We continue to look for lower crude prices over the next month or so but expect much higher prices once winter comes.

CONCLUSION:  The S&P TSX Energy Index is down over 13% from 149 to 129 since the Iranian attack against Saudi oil facilities. We continue to expect lower energy stock prices into the end of October with a test of the lows during tax loss selling in mid to late December. Hold cash for a table pounding buying opportunity during tax loss selling season. We expect to send out Action Alert buy signals at that time.

CATCH THE ENERGY’ CONFERENCE : Because of such high demand we are now offering Basic Breakout tickets to the conference for only $69! These tickets include access to all company presentations, lunch and a USB Drive with all presentations. Get them while they last.

 

 

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 27 Energy Sector CEOs. Below are the companies presenting at the conference. Learn more and register.



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