Josef Schachter - Energy Market Insights – Wed 15 May, 2019

EIA Oil Data and Corresponding Trading Strategy

The below data is courtesy of Josef Schachter. Through some of my recent conversations with Josef we are waiting for a more significant pullback in the oil price to present some good buying opportunities for oil stocks. While the data is pointing more bearish the recent tensions in the Middle East have kept prices somewhere elevated.

Here’s the data and Josef’s comments…

EIA data this week was quite bearish:

  • Crude oil commercial inventories rose by 5.4Mb continuing the shoulder season build. US Inventories are now 39.7Mb above last year or 9.2%.
  • Total stocks(excluding the SPR)  rose by 14.5Mb on the week and are now 84.7Mb above last year or by 7.1%.
  • US production fell on the week by 100Kb/d to 12.1Mb/d and are now down 200Kb/d from the recent peak.
  • Net imports fell by 106K which impacted imports by 742K on the week.
  • Demand on an overall basis fell by 931Kb/d to 19.5Mb.
  • Gasoline demand fell by 723Kb/d to 9.15Mb/d.

Overall a bearish report but offset by the Middle East terrorist attack on tankers and drone attacks in Saudi Arabia launched by Iranian proxies if the reports are correct. Today WTI is up  38 cents to US$62.16/b. We still expect to see the supply fears abate soon and for WTI to fall  below US$60 this month and in June to the low US$$50’s. Stay on the sidelines with cash for the next great buying opportunity in the coming months. 

Click here to listen to the most recent interview with Josef. Posted on May 4th.

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  1. On May 15, 2019 at 4:24 pm,
    FIH says:

    I understand the profitability of the oil sector is a major factor in keeping the conventional markets elevated or at least holding their own. The swans circling appear to be mostly black from my view. A false flag would go a long way to keeping oil prices constant to up in my mind. It would be most interesting to see what everyone else thinks!

  2. On May 15, 2019 at 4:27 pm,
    FIH says:

    Josef, I love and respect your work. I hope I can buy a bunch more Vermilion (VET.T) under $30. Thanx for that one!

  3. On May 16, 2019 at 3:39 am,
    Excelsior says:

    US Senate Moves Forward On Plan to Develop Electric Vehicle Supply Chain

    Reuters | about 13 hours ago

    “We are committed to producing domestically sourced minerals,” Joe Balash, assistant secretary for land and minerals management at the Interior Department, said at the hearing.

    “Just how much Cobalt and other minerals used to make EVs are actually in the United States is anyone’s guess, as the nation has conducted little by way of a national survey.”

    “Current estimates from the U.S. Geological Survey rely on corporate annual reports, historical data from the U.S. Bureau of Mines and other sources, according to USGS spokesman Alex Demas.”

    “Finding out the mineral composition of a particular region requires sending staff into the field to take rock samples, a timely and expensive endeavor. Murkowski’s legislation would require a nationwide reserve analysis for all minerals used to make EVs.”

    “USGS data show, for example, that the United States has 35,000 tonnes of lithium in reserve, a figure that the agency and industry executives see as conservative.”

    • On May 16, 2019 at 3:51 am,
      Excelsior says:

      Trump Likes Fossil Fuels But Investors Don’t

      Bloomberg | about 17 hours ago

      “Fossil fuel never had a better friend in the White House than Donald Trump. So why, two years into his presidency, are investors favoring public companies devoted to renewable energy and giving the Bronx cheer to the coal, gas and oil crowd?”

      “Yet with all of these incentives, fossil fuel is a rare loser in the stock market since Trump took office. And that’s after oil appreciated 15%. The 170 companies in the Russell 3000 Energy Index, most of which engage in oil and gas, are down 12% during the first administration to declare global warming a hoax. The Russell 3000, meanwhile, gained 27% and technology, its best-performing sector, rallied 53%, according to data compiled by Bloomberg.”

      “As lucrative as the overall stock market has been for investors during the past two years, clean-technology shares have done even better. The 89 major publicly traded U.S. firms identified by Bloomberg New Energy Finance as deriving at least 10 percent of their revenue from the business of renewable energy, energy efficiency or clean technology have returned 50% since Trump’s first day in the Oval Office.”