After Chris and I chatted yesterday focusing on some of the opportunities he sees in the market we shift our focus today to some of the more beaten down sectors. We start with a couple comments on the Fed continuing to inject money into the repo market and then quickly shift to the energy and uranium sectors. If you want to be a true contrarian then these areas should catch you eye with how low the share prices are.
Joseph Schachter, Founder of The Schachter Energy Report share his summary of the recent EIA reports for crude oil. He sends these summaries to his subscribers and shares them on Twitter. I reached out and he agreed to let me share these wit all of you.
Click here to find out more about The Schachter Energy report. If you are interesting in investing in the energy sector and even more so into some of the companies Joseph is one of my go to sources.
Here’s his summary this week…
The EIA reports for crude oil for both this and last week (I was travelling so no coverage last week) were impacted by large moves in net imports. Overall the reports were neutral. Specifically for the two weeks:
- This week commercial stocks rose by 7.1Mb versus the expectation of 1.6Mb; so initially this seemed bearish.
- However, in the detail the growth was due to net imports rising by 1.64Mb/d or 11.5Mb on the week surpassing the 7.1Mb rise by 4.4Mb.
- Last week saw a decline of 8.6Mb and this was due to a decline in net imports by 1.36Mb/d or by 9.5Mb almost reaching the level of the decline.
- Therefor these big weekly moves offset each other and are neutral.
- Year to date US consumption has grown by 1.2% to 20.79Mb/d.
- Today WTI is trading down 46 cents to US$56.10/b.
- After trading at a rally high of US$57.88/b last week we now expect the price of crude to start declining once we get into the shoulder season.
- A breach of US$54/b will start this erosion and could take oil below USW$50/b this month.
- In April we should start to see the seasonal shoulder season slower demand and inventories build up. If so, we could see prices decline to below US$45/b.
- A decline in oil related stocks should ensue and another great buying opportunity seen. It will be an attractive buy window but not as good as that seen during the tax loss selling season of 2018.
Josef Schachter, Founder of the Schachter Energy Report has quickly become my go to for independent analysis on the energy sector and the underlying stocks. I bring him back on today to breakdown the OPEC and EIA reports that were released this week. With OPEC cutting production this is bullish for the oil price however some of the data in the EIA report had to temper that bullishness.