Energy Prospectus

Watch this short video from Marshall Atkins (only 12 minutes): https://www.raymondjames.com/corporatio ... -july-2017

IMO there is zero chance that the U.S. can meet future oil demand on its own, especially if oil stays in the $50s. As Marshall points out, very few places in the world is capital available for oil projects at today's oil price.

Today's report that U.S. oil inventories declined was a bit of a surprise, but as the refineries get back up to speed we are going to see MUCH LARGER draws from storage. There is VERY STRONG demand for refined products.

Marshal Adkins at Raymond James (one of the best oil market analysts that I know) says oil must go over $65 heading into 2018 or we could see a significant shortage of supply.

The recent rise in crude oil prices are poised to continue, eventually to possibly as high as $80-$85/bbl, as there is now a "real rebalancing" in the market, Jodie Gunzberg, head of commodity and real asset indices at S&P Dow Jones Indices, tells CNBC.

Support is coming from several sources, including OPEC members complying with production cuts and China demand growth, with an added push from refinery disruptions in the wake of Hurricane Harvey, according to Gunzberg.

"When we look at the index data, we can see the price could move even as high as $80-$85 - not immediately, but with their structural backwardation and shortages in the market, you just can't replenish it overnight," Gunzberg says.

Ed Morse, Citigroup (NYSE:C)'s global head of commodities research, says a supply gap could emerge in the market as early as 2018, as some nations including Iraq already may be pumping at maximum capacity
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If we see more respected analyst like this saying oil prices must go higher, we are going to see Wall Street push lots of money into the oil & gas upstream companies.

I know some of you may find this hard to believe, but 100% of oil price cycles end.
The bigger the fall in price, the bigger the rebound in price. Why? Because this is an EXTREMELY CAPITAL INTENSE business and oil is the most important commodity in the world. The global economy MUST HAVE a steady supply of products made from crude oil. If gasoline rationing starts, what will you pay to get to the front of the line?

WTI closing over $52 was good, but there seems to be strong resistance at $52.50. Remember when you just hoped for $50.

Keep this in mind:
> Although EIA weekly estimates of production and inventory levels are "questionable", they are the best data the market has.
> Oil inventories outside the U.S. are much more difficult to estimate, but they are probably falling fast because the current NYMEX curve makes it uneconomic to store oil.
> One of the largest onshore oil storage facilities in the world outside of Oklahoma is in South Africa. I saw a report this week that it falling rapidly.
> When there is a flat NYMEX curve, storing oil in tankers is not economic.

The NYMEX curve for WTI is in a slight contango (higher forward prices).

Here is something you all need to know: The NYMEX strip for oil (any commodity for that matter) is not a price forecast. In fact, it is a very poor estimation of where oil prices will be beyond the next two or three months. It is just where the BID/ASK sits for Calls on futures contracts sit today.