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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 32 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.
WEEKLY ENERGY DATA: Crude oil prices held up last week at around US$58/b for WTI as cross currents continue. On the positive side you have some optimism about China/US trade talks and the Saudi ARAMCO deal which is getting support from a plan to extend the current OPEC quota system from the end of Q1 to the end of Q2/20.
Last week the EIA data was somewhat bearish but was offset by the above issues.
Specifically,
- US commercial stocks rose by 1.4Mb on the week around the expectation but would have been 1.2Mb higher if not for net imports falling by 172Kb/d.
- US Gasoline volumes rose by 1.8Mb as refinery utilization rose to 89.5% from 87.8%.
- US consumption fell by 269Kb/dd to 21.2Mb/d with gasoline demand down by 129Kb/d to 9.2Mb/d.
- Canadian exports to the US rose by 187Kb/d to 3.195Mb/d or were 47.7% of US imports. Next largest supplier to the US was Mexico at 473Kb/d.
Natural gas consumption is rising with the winter weather and there was a drawdown from US storage of 94Bcf which was materially above the five year average of 48Bcf. We are bullish on natural gas stocks.
CONCLUSION: We continue to expect tax loss season to be very nasty this year and with 4-5 weeks left in this stock price erosion period we plan to send out Action Alert BUYS to our subscribers as we see the bargains get even better. Many energy and energy service stocks are near their yearly or multi-year lows but could fall further. The S&P/TSX Energy Index now at 133 could fall below 120 in the next few weeks. If so there will be table pounding buys. We will note to subscribers the best buys by three different buckets: Dividend Model, Energy Growth stories and Energy Service Growth stories. To subscribe.
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