Energy Prospectus

Oil prices are determined by global supply / demand fundamentals (unlike natural gas and to a lesser extent NGL prices which are determined by regional supply / demand). Demand growth for oil is "relentless" because there are still large population centers that still consume only a small fraction of the oil that Americans do. Oil consumption is directly tied to standard of living and most people want a higher standard of living for their family. IEA estimates that global oil demand will be up 1.6 million barrels per day in 2017. My forecast is that when the actual demand growth for 2017 is calculated it will be over 2.0 million barrels per day. Why?, because growth in India is soaring. - Dan

“A Commodity Superpower Asks What if India Turns Out Like China?” Bloomberg News, October 5, 2017

"Since we wrote in our last letter that India’s growth in commodity consumption is on the
verge of substantial acceleration, numerous data points have emerged confirming our theory. Many
analysts believe, because of structural and cultural problems, India would never be able to replicate
China’s growth over the last 25 years, that India would “never be China.” We have never believed
this, although our models told us that India’s period of accelerated commodity demand (the “S-Curve”
tipping point) was still a number of years away . However, our models are now beginning to tell us
India is today where China was back in the early part of last decade, and that going forward India will
surprise materially to the upside in terms of demand, just like China starting doing 17 years ago. It’s
important to note the surprises have already started. For example, in a series of recent revisions, the
IEA has made huge upward revisions in India’s oil demand for the last several years — revisions that
almost no India or oil analysts have commented on. The oil section of this letter will discuss the size
and importance of these revisions. Given the supply constraints we have just talked about in global
oil markets, as well as continuing strength from other sources of non-OECD demand and pervasive
market bearishness, we believe we are on the verge of a once-in-a-career inflection point in global oil
markets." - Goehring Rozencwajg Associates, Natural Resource Investors Newsletter 10/20/2017

If you'd like to read the full GRA report, send me an e-mail (dmsteffens@comcast.net)

As I have posted here many time, supply/demand fundamentals ALWAYS win in the end. Today, the fundamentals for oil are screaming (to me at least) that oil prices must move higher because if they don't we are looking at a significant global oil shortage by the end of this decade. - Dan

"Our research focuses on fundamental developments taking place in both supply and demand
and we aim to be among the very first in identifying new trends. As a result, we are sometimes early
in calling for a market bottom. That’s why we construct a “roadmap” populated by “mile-markers”
that we must pass in our journey. If we are travelling in the right direction and keep passing our
data points, eventually the commodity price will reflect the true fundamentals in a market. In the
interim however, it can be frustrating. That is precisely what has happened with oil markets this year.
Our research has told us we have been on the right track, but investor sentiment has been slow to
turn positive. We are very quickly approaching a level in comparative inventories where investors will
no longer be able to ignore the positive fundamentals. The turning point is very near and the
investment implications are profound." - Goehring Rozencwajg Associates, Natural Resource Investors Newsletter 10/20/2017

This is something that you should do each day.

After the markets close, CME Group puts up a short video of what happened to move oil prices on the NYMEX trading floor.
Here is the link: http://www.cmegroup.com/trading/energy/ ... crude.html

The video is only 3 or 4 minutes long, but I like it because it gives me a better idea of what the commodity traders are looking at.

A Reuters survey says OPEC's October production fell by 80K bbl/day to 32.78M bbl/day, meaning compliance to the cartel's pledged supply curbs was 92%, up from 86% in September.