Energy Prospectus

WTI closed over $93 today, which is encouraging. We will see how it holds up next week in this crazy market, but several more closes over $93 could set the stage for a move back to the $96 range IMHO. People in the northeast start thinking about filling up the heating oil tanks in October.

part of report by
Eric Nuttall, a guest columnist for Inside the Market, is portfolio manager of the Sprott Energy Fund.

Now, if I were to ask the average investor how they feel about the energy sector right now, I would expect their answer to be the exact opposite of the rosy responses of those in the business, given the daily shellacking of oil stocks and the negative feedback loop that it has created.
Herein lies the opportunity and an example of why it is important to see the difference between perception and reality.
The current perception is that the price of crude oil is down because the Chinese economy is weak and suddenly demand has declined, that a strong U.S. dollar means a lower oil price, and that oil stocks are overvalued. The exact opposite is true. China has been weak all year even when Brent oil was over $120 (U.S.) a barrel, global oil demand has strongly rebounded from the lows seen in the second quarter, and the correlation between the US. dollar/euro exchange rate and oil is virtually non-existent over more than a three-week period. I would argue that the energy sector sell-off is due solely to the broader market correction and nothing fundamental to the energy industry. In my view, Canadian oil stocks are now very undervalued.

http://www.investorvillage.com/smbd.asp ... d=14218315

I'm not very good at market timing, but I do believe the energy stocks are oversold.
> 3rd quarter reports are going be very good.
> Demand for oil is going up
> Production heading into Q4 will be up for all of the Sweet 16.
> Natural gas prices should firm up as winter approaches.

Take a look at this chart and you will see the reason crude oil prices fell so much in September.

http://www.marketwatch.com/investing/index/dxy/charts

that's the reason I keep the dxy on my watch list.

jim

This is why the U.S. dollar has gone higher. A ton of money coming to the "Safe Haven" of the U.S.
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Now that America has mobilized a global anti-ISIS coalition; and now that they're launching daily air strikes against the enemy, you'd think the terrorist group would soon be decimated — or at least on the run. Unfortunately, nothing could be farther from the truth!

In fact, if wealthy investors in the region were fearful for their money and for their families a month ago, they're likely to be in a PANIC today — because ...

Despite 62 countries and groups in the coalition ...
Despite 194 air strikes in Iraq plus 16 in Syria, and ...
Despite launching over 100 Tomahawk cruise missiles ...
ISIS is still advancing into new territory!

With ISIS taking their villages and now only nine miles away from their biggest city, more than 150,000 Kurdish refugees have fled from Syria to Turkey in just the past week, one of the most rapid displacements of a large population in history.
Regardless of the many gun sight videos you see on YouTube and TV, the plain truth is, coalition air strikes are only doing minor damage to the terrorist army. They're strictly taking out the few armed vehicles and facilities that are far removed from populated areas.

The plain truth is, the ISIS Command and Control centers ... the ISIS top leaders and ... nearly the entire ISIS army of jihadists are embedded among innocent civilians in cities and villages, where coalition forces dare not strike.

Result: The ISIS terror army is still on the move, swarming into villages, taking more territory and imposing their rule.

Indeed, right now, ISIS is on the verge of capturing Kobani — a large Kurdish city of some 400,000 residents near Syria's border with Turkey.

Just in the last few days ...

ISIS has already taken some 60 Kurdish villages in the area and have them fully under their control.

ISIS has surrounded Kobani from the West, the South and the East, and ISIS forces are now encamped a mere nine miles outside the city limits.

Fearing what's almost sure to follow, more than 150,000 refugees have already fled the area to seek refuge in nearby Turkey.

They're right to be terrified: Due to their historic Persian roots, the Kurdish minority is viewed by the ISIS extremists as among the most hated infidels. If ISIS takes Kobani, it will be a bloodbath — thousands of Kurds will be massacred; their mothers, wives and daughters kidnapped or enslaved.

THE BOTTOM LINE: For all practical purposes, ISIS is still winning! At a minimum, they are proving it's impossible for anyone — even a coalition of 62 nations and groups — to win this war from 30,000 feet or with remote-control joysticks.

If it is to defeat ISIS, the coalition must get its hands dirty. It must put troops on the ground — something President Obama has sworn he will not do.

New tidal waves of money headed this way!

Meanwhile, wealthy and super-wealthy investors — in the Levant, the Persian Gulf and throughout the region — are voting with their dollars. They are moving their assets to what they perceive to be among the safest of safe havens — the United States of America.

And they're not alone: The Eurozone economy is unraveling again. Even greater wealth held by investors and institutions there is also seeking a refuge — again, mostly in America.

The amount of money that could be headed this way is staggering: According to the World Federation of Exchanges, more than $15 trillion is now invested in European and Middle Eastern stock exchanges. If even just 10% of that flowed to the United States it would amount to double the largest yearly inflows in history!

And that's just the money that's invested in stocks. Add in the value of other liquid assets now held in OPEC and European countries, and you could be looking at two, even three times that amount!

At what point will the energy sector diverge from the effects of an increasing dollar? Cold weather? Other?
Aug/Sept dollar rise looks parabolic. Do you see a peaking of the dollar?

although I've been a gold bug in the past, I don't have any money in gold stocks currently, just a few Gold Eagles in a safe deposit box, just to be prepared for the zombie apocalypse. Since the US dollar as the latest "safe haven", gold has retreated to the $1200 levels, and looks terrible on the charts, maybe headed lower. Crude oil and natgas pricing showing some life here, with cold weather just around the corner.

Isis fighters are reportedly just one mile away from Baghdad as reports emerge of al-Qaeda militants bolstering their ranks in Syria.

http://www.independent.co.uk/news/world ... 61392.html

why the big jump in dxy intraday? sent cl down big time and all the oilies with it!!

I think this has something to do with the protests in China. If a lot of Hong Kong money runs to the U.S. it could push the dollar even higher.

Fundamentals for oil are solid, but it does trade in U.S. dollars. So as dollar moves higher, oil moves lower.

Note that the dollar's strength should have no impact on natural gas prices and only minor impact on NGL prices.