Monday , June 1 2020
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Tag Archives: energy

Commodity Tracker: 5 charts to watch this week

US oil exports are under pressure as WTI’s differential to Middle Eastern offers narrows, reducing its appeal in Asia. Meanwhile, the gut-punch to global demand from the coronavirus pandemic is playing out across markets, putting EU carbon prices high on traders’ watchlist after last week’s nosedive. 1. WTI loses competitive edge in OPEC+ price war     What’s happening? US crude suppliers could fall victim to the price war triggered by Saudi Aramco’s latest move to...

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Europe’s largest gas field is winding down, but market has plenty of alternatives

The Netherlands’ Groningen field is entering its final chapter as a major supplier of natural gas to the continent. In 2022, eight years earlier than originally planned, output from Europe’s largest field will finally come to a halt. Stepped reductions were introduced from 2013, due to the risk of earthquakes in the region triggered by production drilling. The move will leave the European gas market 54 Bcm/year shorter compared with 2013. The pace of the phase out has speeded up since the...

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ESG challenges to energy investing

I received a ton of comments from my post three weeks ago on the energy sector (see Energy: Value opportunity, or value trap?). I engaged in multiple long email discussions with several readers on different aspects of that post. This is a follow-up to the publication address two main issues that were raised: The impact of the solar cycle hypothesis on the Earth’s climate, and as a bullish catalyst for the energy sector How to investing in energy stocks in the new ESG era. To briefly recap,...

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Energy: Value opportunity, or value trap?

Callum Thomas recently highlighted an observation from BAML that the market cap of Apple (AAPL) is now larger than the entire energy sector. AAPL is now the largest stock in the index, but its weight at 4.5% is not especially extreme in the context of the historical experience. The fact that AAPL’s market cap has eclipsed the aggregate weight of the energy sector is telling. Is this an inflection point for the energy sector? Do energy stocks represent a value opportunity that should...

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Creative Destruction 3.0 Meets Roaring ’20s 2.0

Creative destruction refers to the incessant product and process innovation mechanism by which new production units replace outdated ones. It was coined by Joseph Schumpeter (1942), who considered it ‘the essential fact about capitalism’. The process of Schumpeterian creative destruction (restructuring) permeates major aspects of macroeconomic performance, not only long-run growth but also economic fluctuations, structural adjustment and the functioning of factor markets.  At the...

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Consumers Are Keeping The US Out Of Recession? Don’t Count On It.

Just recently, Jeffry Bartash published an interesting article for MarketWatch. “Like a stiff tent pole, consumers are keeping the U.S. economy propped up. And it looks like they’ll have to do so for at least the next year. Strong consumer spending has given the economy a backbone to withstand spine-tingling political fights at home and abroad. Households boosted spending by 4.6% in the spring, and nearly 3% in the summer, to offset back-to-back drops in business investment and whispered talk...

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CEO Confidence Plunges, Consumers Won’t Like What Happens Next

There is a disparity happening in the country. No, it isn’t political partisanship, but rather “economic confidence.” The latest release of the University of Michigan’s consumer sentiment survey rose to a three-month high of 96, beat consensus expectations, and remains near record levels. Conversely, CEO confidence in the economy is near record lows. It’s an interesting dichotomy. The chart below shows our composite confidence index, which combines both the University of Michigan and...

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Imminent war with Iran?

The headlines look ominous. The US has dispatched a carrier task force to the Persian Gulf, and a second one is due to arrive soon. The State Department ordered the evacuation of all non-essential personnel from Iraq: The U.S. State Department has ordered the departure of non-essential U.S. Government employees from Iraq, both at the U.S. Embassy in Baghdad and the U.S. Consulate in Erbil. Normal visa services at both posts will be temporarily suspended. The U.S. government has limited...

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Energy and commodities highlights: Oil diplomacy, global LNG flows, trade wars

In a week dominated by geopolitical headlines, oil diplomacy was also high on the agenda. Despite a schedule that included a high-profile summit in Hanoi, US President Donald Trump found time to tweet his view of crude prices to OPEC, ahead of a meeting between US and Saudi officials. OPEC’s next regular biannual meeting will take place June 25-26 in Vienna. Meanwhile the so-called NOPEC bill is starting its path through the US legislative process, even as the...

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