Category

Oil

Energy Investing

Are the "Special Few" Manipulating Oil Prices?

Last week, a firestorm hit the markets.

In a shocking announcement it was discovered that a "special list" of users had been paying a fee to Thomson Reuters to receive the University of Michigan Consumer Sentiment Index figures two seconds early.

And while most market analysts were aware that there are several tiers of service available for these figures, only a select few knew a higher payment could get them the figure before it is released.

Two seconds. It may not seem like much but it's enough to trigger a massive spike in computerized transactions before the market even knows what the figure is–let alone the average investor.

So what difference does a such a brief leg up to a "special few" mean anyway?…

Quite a bit given what we know about today's computer-generated mega trading programs that make big profits on fractional changes in price.

The massive volume of these transactions destabilize trading environments, cause instantaneous volatility spikes, and drive a range of results having nothing to do with fundamentals or actual conditions.

Not to mention how it all flies in the face of the idea free exchange markets are justified on the outmoded assumption that there is equal access and availability of information.

Now there are possibly even more serious questions emerging and they involve a matter directly relevant to you.

We are learning the same manipulation may be occurring in the energy sector.

Energy Investing

This Pipeline Will Make Investors More than Keystone Ever Could

Look for the Obama administration to delay its Keystone Pipeline decision until after the 2014 election as it's preoccupied by ongoing scandals and the debate about fracking in the United States.

With House and Senate Democrats now vulnerable over these scandals and Obamacare costs, the President is expected to appease his base and continue to double down on alternative energy projects at the Department of Energy.

Oil Stocks

These Oil Stocks Are the Big Winners in This Year's "Summer Pop"

I have been "in the field" for the past several days and will be back in circulation later this week. But I wanted to send you a note on what's been taking place recently.

The last two trading sessions have seen a spike in oil stocks. The rise has been focused on companies that provide services to early-stage field development, as well as for crude production.

Now, we have witnessed a similar "summer pop" in each of the past three years. It tends to signal a rise in expected medium-term demand for both crude oil and oil products.

However this time around, the improvement isn't reflected in companies across the board, but rather in those emphasizing geographically specific field plays.

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Energy investing

How to Invest in Oil's Final Frontier: The Arctic

Investors searching for how to invest in oil in 2013 should be focused on these latest developments from the Arctic.

In fact, countries are racing to get a piece of what could be the final frontier for oil…

As ice melts in the Arctic region, oil and gas trapped beneath the water becomes more accessible.

Money Morning Global Energy Strategist Dr. Kent Moors recently explained to Money Morning members about the search for Arctic oil and gas.

He spoke about the years-in-the-making U.S. Geological Survey's Circum-Arctic Resource Appraisal. The study found that 84% of the total undiscovered oil and gas left on the planet is located above the Arctic Circle, mainly offshore and in three huge basins that lie under shallow seas.

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Oil

Why Oil Is the New "Gold Standard"

Something very interesting just happened at the 2013 MoneyShow in Las Vegas.

The purveyors of doom and gloom were all still hawking their services there. But the primary solution they offer – a cure-all elixir for everything that ails markets – was beginning to wear thin.

The usual conviction that this one asset is the remedy was gone. And the seats at these sessions were only half-filled.

Indeed, gold is beginning to lose its luster.

The erstwhile commodity fix has been under pressure of late as well. Yet, even while most eyes have been on declining commodities – especially gold, silver, and platinum – something else has been happening.

Crude oil is emerging as a new replacement to reflect stored market value.

That is good for folks like us who invest in the energy sector, because it will provide a floor to downward pressures in oil prices. It will not counter all forces reducing the price of oil, but it is likely to temper such movements, allowing us some leverage.

Oil

How to Hedge Oil Prices in Volatile Markets

Welcome to the new pricing environment.

We're already started to see kneejerk reactions to short-term indicators last Friday.

A better than expected jobs report sent crude oil prices higher immediately. The figure was encouraging but not a barnburner. Of course, some massive upward revisions for the previous two months hardly hurt either.

Some of this is the result of investors still gun shy after a massive recession. Now we have certainly had a very nice bull market run and the prospects of another meltdown any time soon are negligible.

Nonetheless, the new drivers of oil prices provide little chance for real dynamics to work themselves out. This is all about reaction. Picture it as the newest investor version of smoke and mirrors.

Today's prospects are very good for the oil sector. Natural gas has pulled back from some heavy gains. Major losses earlier this week were erased on Friday. There is a range forming, and it is likely to remain absent any unexpected developments (largely geopolitical at this point).

Demand will increase as we move into the summer; global levels will rise quicker than domestic in the U.S. or Western Europe. That will provide some upward pressure on oil prices.

Remember as well that, while certain region such as the U.S. have a new largess in unconventional (tight or shale) oil, the full volume of that new production will be more expensive to bring on line. That means the additional extraction will not decrease the overall price.

However, the real question is how to make money if trading is in a narrow range for the near term.

You need to develop a new hedging strategy. Here's how…

Energy Investing

A Major Breakthrough in U.S. Oil Exports May Be Coming

As the crude market continues to show considerable volatility, price gyrations are prompting another round of concerns over supply and production.

There isn't a shortage to worry about right now.

But whenever we have some issues on the demand side, attention shifts to the supply currently available on the market. And it's in this repetitive exercise that one of the major errors by analysts always occurs.

I have noted this shortcoming on several occasions.

Energy Investing

Why the "Death of Peak Oil" Still Won't Mean Cheap Oil

Today (Wednesday) an analyst from Citigroup became the latest lemming to declare the death of peak oil.

In a report entitled "The End is Nigh," Seth Kleinman says a combination of flattening demand and rising supply will cause oil prices to slide slightly by the end of the decade to $80-$90 a barrel.

But while oil companies have made many large new discoveries over the past few years, including big shale oil finds in North America and Australia as well as deepwater finds in the Gulf of Mexico, that doesn't mean oil prices will fall.

In fact, according to Money Morning Global Energy Strategist Dr. Kent Moors, it's far more likely that oil prices will continue to rise over the next decade.

Moors points out what most other analysts seem to be missing – that all of the new oil finds present many challenges that will add to the cost of extraction.

"None of this new volume is light, sweet crude," Moors said. "The average wellhead costs continue to go up, and that moves its way downstream to processing, wholesale, and retail."

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Oil & Gas

Forget the Kneejerk Reactions, Oil Prices Are Going Higher

With all of the concern exhibited over Cyprus' problems with banks and China's high-profile billion-dollar solar implosion, the doomsayers are once again predicting an oil price crash.

These guys must really need your money!

Each new geopolitical event is cast as the end of the world as we know it.

The fact is there is nothing on the horizon that will collapse oil prices for one very simple reason.

The prospects for oil prices are increasing, and elevating oil products along with them. Most sections of the U.S. will be testing 2008 gasoline price highs at the pump well before mid-summer.

Yes, we did see a swing down in crude futures during the initial stages of the Cypriot crisis, augmented by some short-lived negative comments on Chinese industrial prospects.

But by last Friday morning, stabilization had occurred and an oversold crude oil futures market began to move back up.

Energy Investing

Oil Companies Hope for New Opportunity in Energy-Rich Venezuela

One of the biggest headlines recently related to oil companies was news of the passing of Venezuelan President Hugo Chavez.

"El Commandante" as he was affectionately referred to by his countrymen, at least by those who approved of his leftist policies, was 58 and succumbed to a lengthy battle with cancer.

Predictably, news of Chavez's passing has sparked ample speculation about what the future holds for Venezuela's oil industry and those oil companies looking to profit from a possible renaissance there.

Venezuela is South America's largest oil producer and an OPEC member. In what may come as a surprise to some investors, Venezuela could be called the Saudi Arabia of OPEC.

In other words, the South American nation is home to about 300 billion barrels of proven oil reserves, compared to about 270 billion barrels in Saudi Arabia. That is according to OPEC's own estimate.

Not only that, but Venezuela is home to the largest natural gas reserves in the Western Hemisphere.

Given those superlatives, it is easy to understand why some Western oil companies are cautiously optimistic about what the future may hold for them in Venezuela.