Eq: Energy

Eq: Energy (39)

Thursday, 25 March 2021 17:01

Forget WFH, Here is the Next Asset Class to Jump

Written by

(Houston)

The onset of the pandemic had weak demand for about every good in the U.S. except…See the full story on our partner Magnifi’s site.

Monday, 22 March 2021 16:58

This May Be a Tail Risk for Commodities

Written by

(New York)

Commodities have been doing great this year. The big rise in demand coupled with weak supplies because of COVID have led to a surge in prices. However, one bright spot—metals—might have some trouble looming on the horizon. There is increasing speculation that the US may scrap pennies. If that happens, it could put a dent in the copper and zinc markets. This dent would not only come from a lack of new demand, but the fact that pennies would be taken out of circulation and recycled. This would amplify the effect by boosting supply to the system and lowering demand for newly-mined metal.


FINSUM: This might have a strong psychological effect even though the total quantity of zinc from pennies accounts for less than 4% of total annual output.

Thursday, 18 March 2021 17:21

The Winners in Losers in the New Commodities Boom

Written by

(Houston)

Commodities are doing very well this year. Every big bank, including Goldman Sachs, thinks we may be starting a new commodities super cycle. The big question is exactly which commodities and who will be the big winners. Everything from food, to metals, to oil has been rising and this creates some clear winners, particularly producers of those commodities. That means a big windfall for countries like Saudi Arabia, Australia, and Chile, who are big net exporters of various raw materials. It is net importers that get hurt the worst, with an absolute behemoth—China—likely to suffer the most, as it is one of the largest buyers of commodities in the world. In fact, it almost single-handed drove the big commodities boom in the 2000s.


FINSUM: So the key here is picking the right emerging markets. Additionally, investors may want to double-think investing in oil, as production hikes could undermine prices quickly.

Monday, 15 March 2021 17:32

Major Bank Says Oil is Going to $100

Written by

(Houston)

Oil has been on a great run this year. Underlying crude oil, as well as ETFs like XLE, have been on fire of late, and most will have noticed the higher prices at the pump. A number of forces—like rising demand and tight supply—have been supporting the market, including OPEC lowering output. All of this has led one prominent bank, Piper Sandler, to say that oil is headed back to $100 per barrel, a level it has not seen in years. According to Craig Johnson at Piper Sandler, “I could actually see a number that could be north of 100 in the next, say, six to ... 12 months from here … To us, it looks like you could have more than 40% upside to get back to the old highs in 2018”.


FINSUM: It is worth noting that this is by far the most bullish call on the street. BAML and Goldman Sachs have their calls for this year at $67 and $75, respectively.

Thursday, 11 March 2021 19:02

Goldman Says a New Commodities Boom Has Begun

Written by

(New York)

You have probably seen a few articles floating around, but the last several weeks have really hammered it home: we are at the precipice of a new commodities supercycle. The pandemic brought on a huge fall in commodities prices because of a tumble in demand. But as the economy is heating back up, demand is jumping and supply is not matching it. Raw materials demand has surged across the board. Most have been paying attention to oil prices, but check out others like copper and metals. Goldman sees the dawn of a new decade-long demand surge akin to what happened between 2000 and 2010, when the rise of emerging markets/BRICS drove huge raw materials consumption. This time around Goldman says that the green industrial revolution will create a “capex cycle” on part with what happened to emerging markets in the 2000s.


FINSUM: The bank also argues that social and tax policies that are favoring income redistribution to poorer households is bullish for commodities since those households tend to spend a higher percentage of it.

Monday, 08 March 2021 17:35

Goldman Sachs Bullish on Commodities Market

Written by

(New York)

Jeffrey Currie, head of Commodities Research at Goldman Sachs, said there is the beginning of a structural bull market in raw materials…View the full article on our partner Magnifi’s site

Monday, 01 March 2021 07:26

How to Capitalize on the US Energy Crisis

Written by

(Houston)

The polar vortex sweeping across the south has left many American’s without energy, but investors are not as powerless...see the full story on our partner Magnifi's site

Tuesday, 23 February 2021 18:37

Here is Where Oil is Headed

Written by

(Houston)

Unprecedented freezing temperatures across the south have wrangled most news headlines this week. This is causing a not so surprising collapse in production from the major U.S. manufacturers in the state most affected, Texas. But the lack of demand from refineries is creating a negative pull on oil prices as they are slower to adjust to changing conditions. Sluggish oil prices will be expected to continue despite a 3.5 million barrel shortfall in production because the refineries aren’t in high demand. On top of this demand shortfall, OPEC has announced plans to ramp up production. These combining factors have produced about a 2% decline in WTI crude futures after declining 1% in trading last Thursday. Finally, the Biden administration has set the course to re-engage with the 2015 Iran nuclear agreement, however, Trump-era oil sanctions have not been reversed.


FINSUM: The run-up in oil prices over the last two weeks was driven by inclement weather in the U.S. but look to the finer details of global production in the next couple of weeks to push oil prices back down. Examine related sectors, like the airline industry, to capitalize on these fluctuations.

Friday, 16 October 2020 17:29

How Oil Could Benefit from a Blue Wave

Written by

(Houston)

When you think of oil, you don’t normally think of an industry that would gain from a big win by Democrats in an election. But as it happens, oil could very well gain if Democrats sweep the presidency and congress. The reason why is slightly perverse, but that makes it no less relevant. The concept is that Democrats would be bring new regulation around fracking; specifically, regulations that limit new drilling but allow existing projects. What this would mean is a steady rise in prices as inventory becomes constrained as the recovery proceeds. For example, Morgan Stanley is forecasting almost a 100% gain in natural gas prices next year.


FINSUM: Oil and gas are a physical supply and demand market, and if regulations keep supply in the ground, then prices will rise.

Friday, 08 May 2020 10:11

Stay Away from These Sectors

Written by

(New York)

This COVID crisis has made whole areas of the economy uninvestable. Many companies have had to halt operations entirely and as the lockdown drags on it has become more clear that many may not reach their previous levels for years (if ever). One problem is that many stocks and sectors appear to be “stubs”, or stocks that have very binary value propositions. Unless things go very right, they are worth almost nothing. Energy is a good example. If oil prices don’t come back and demand for oil stays low, what is the US oil sector worth? Big brock and mortar retailers are the same—what are they worth if the re-opening doesn’t go well?


FINSUM: This is a useful way to think about some sectors, but the outcomes are probably not as binary as they may seem right now.

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