Tuesday, October 31, 2017

#TSX Breaking Out to All Time Highs. Next Advance to be Driven by #Energy Sector $XEG



Weekly Quant & Technical Review
Paradigm Capital 

 TSX Composite Index: Breaking Out to All Time Highs

https://stockcharts.com/c-sc/sc?s=%24TSX&p=W&yr=5&mn=10&dy=20&i=t80029412152&a=431521444&r=1509313071122&r=1509313162599&r=1509313170762&r=1509313180446&r=1509313193141

TSX Composite Breaking Out to All Time Highs, Positioned for Catch-Up Versus Global Markets

o   The TSX Composite broke out last week to all time highs, confirming the resumption of the primary bull market. The move reaffirms our view that the weakness through the first three quarters of 2017 has been a healthy correction to work-off overbought momentum following a 38% rally from the 2016 lows. Weekly momentum indicators support the breakout as weekly RSI reversed higher off 40 and MACD is trending on a buy signal above the 0 line. Conservative technical upside measures to 18,000.

o   Risk ratios in Canada continue to point to a risk-on environment. Three key ratios: Industrials vs. Utilities, Financials vs. REITs, and Discretionary vs. Staples ratios are all in a primary uptrend and breaking out to 52-week highs. The risk-on market structure supports further upside in the broader TSX.

o   The nine month period of relative underperformance of Canadian markets is reversing trend as the TSX Composite begins to carve out an uptrend versus the FTSE All World Index. The relative ratio broke out from a multi-month downtrend in September and has held uptrend support on each subsequent pullback. Combined with a bullish shift in momentum indicators, the TSX is positioned to play catch-up versus global markets.


TSX Energy Index: High Volume Breakout

 

 Energy Sector to Lead the Next Advance in the TSX

o   On Friday, the TSX Energy Index broke out from a month-long bullish flag on the highest volume day since December 2016. Adding significance to Friday's move is the fact that price action reversed directly off a retest of the rising 50-day moving average and neckline of the June to September double bottom. Combined with RSI holding 40, MACD curling higher off the 0 line, and Full Stochastics triggering a buy signal from oversold levels, the breakout confirms our view that the technical structure of the sector has shifted from bearish to bullish. Next level of resistance exists at $12.90 at the top of the February to May trading range.

o   Longer-term, we view the recent downtrend breakout as a bullish shift in trend within a larger inverse head and shoulders base that has been forming since 2015. The breakout is now forming the right shoulder after carving out a double bottom off a 2/3rd retracement of the 2016 advance (the maximum expected correction within a bull market). Weekly RSI has reclaimed bullish territory and MACD is triggering a buy signal, signaling price is positioned for a rally back to the neckline of the basing pattern near $14.50.

o   Adding to our conviction in the energy sector is the relative uptrend the XEG has been carving out versus the TSX since July. The reversal off trendline support combined with momentum indicators reversing higher from oversold levels signal the resumption of the developing trend. As such, we maintain our overweight recommendation.    

 

TSX Energy Index: Carving Out Right Shoulder of Multi-Year Base

 

TSX Energy Index Carving Out Relative Uptrend vs TSX: Maintain Overweight Recommendation

 

Wednesday, October 11, 2017

Fuel for thought - The future of #EV & the implications for #Oil Companies

#ElectricVehicles make up less than 0.2% of all road vehicles, but if growth in uptake continues at the current level – 60% in 2015 – then, according to some commentators, peak oil could become a reality as early as 2023. 

- Given that transport currently drives 56% of demand (of which roughly half is attributable to passenger vehicles), innovations in transportation will play a key role in the future oil demand story

- Transportation will diversify, but not by enough to offset the 23.7m bopd declines in production from conventional crude oil fields expected by 2025. As such, the continuing need for industry investment in new oil supplies will likely underpin oil prices for some time to come.


Fuel for thought – Driving Demand

From E&P Mirabaud Energy research 

11 October 2017

There is a certain inevitability about peak oil, the world is changing and so too is our energy mix. However, exactly when that tectonic shift away from oil will occur, and what aftershocks that will ultimately have, remains up for debate. At present, electric vehicles make up less than 0.2% of all road vehicles, but if growth in uptake continues at the current level – 60% in 2015 – then, according to some commentators, peak oil could become a reality as early as 2023. Clearly there are other factors at play, but given that transport currently drives 56% of demand (of which roughly half is attributable to passenger vehicles), innovations in transportation will play a key role in the future oil demand story. Whilst we see this exponential growth in EVs as certainly bullish for battery manufacturers and their suppliers, we believe that the outlook is not as bearish for the oil producers as some commentators might suggest. Although electric vehicles are likely to contribute to the decline of oil demand in the coming decades, unless great leaps in affordability are made, they are unlikely to be the biggest threat to oil demand in the near term. Transportation will diversify, but not by enough to offset the 23.7m bopd declines in production from conventional crude oil fields expected by 2025. As such, the continuing need for industry investment in new oil supplies will likely underpin oil prices for some time to come.

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Wednesday, August 23, 2017

What #Energy Sources Power the World?

#FossilFuels represent about two-thirds of electricity usage; #Nuclear 10%; #Hydroelectric Power is the king of #Renewables

From Visual Capitalist:

What Energy Sources Power the World?

There are many types of maps out there, but one of the most telling ones is a simple satellite image of the Earth at night.

On these powerful images, the darkness is a blank canvas for the bright city lights that represent the vast extent of human geography. The bright spots help us understand the distribution of population, as well as what areas of the world are generally wealthier and more urban. Meanwhile, the big dark spots – such as over the wilderness in northern Canada, the Amazon basin, or in Niger – show areas that are not densely populated or more rural

The image above is based on this principle. It comes from NASA, and is a composite made from 400 separate satellite images from 2012. 

How Are These Lights Powered?

But what if we could differentiate, by "shutting off" lights that are powered by certain electricity sources?

Today's visualizations come from a nifty interactive website put together by www.GoCompare.com  , and they breakdown the world's electricity by source: fossil fuels, renewables, or nuclear fission.


Fossil Fuels

To start, here are the places on Earth that are powered by fossil fuels.

(Click image to see larger version)
Fossil Fuels only

Globally, fossil fuels represent about two-thirds of electricity usage. It's also worth noting that fossil fuels also make up the majority of non-electrical sources needed for things like automobiles, aircraft, and ships, which are not shown on the map. 

For further interest, we have previously shown the evolution over time of total U.S. energy usage, as well as a detailed breakdown of current U.S. usage – both which are still dominated by fossil fuels such as oil, natural gas, and coal.


Nuclear Only

Here are the places on Earth powered by nuclear fission.

(Click image to see larger version)

Nuclear only

Nuclear makes up about 10% of all global electricity usage – and France is the world's most reliant country, getting about 74% of its power mix from nuclear. Also noteworthy is Japan, which has switched its major electrical source from nuclear to fossil fuels since the Fukushima incident in 2011.

Nuclear is a major source of energy in the rest of Europe as well.

Belgium (51%), Sweden (43%), Hungary (51%), Slovakia (55%), Czech Republic (35%), Slovenia (33%), Ukraine (43%), and Finland (33%) all draw significant amounts of their electricity from nuclear reactors.


Renewables

Last, but not least, are renewables.

(Click image to see larger version)

It's important to remember here that hydroelectricity is the largest renewable energy source by far, and that countries like Canada and Brazil rely on hydro extensively. 

Outside of hydro, Italy is a leader in solar generation (6% of all electricity). Meanwhile, just eight countries host over 80% of all installed wind power: France, Canada, United Kingdom, Spain, India, Germany, USA, and China.

Finally, it's worth noting that there are four smaller countries that get all, or nearly all, of their electricity from renewable sources. Those include Iceland (72% hydro, 28% geothermal), Albania (100% hydro), Paraguay (100% hydro), and Norway (97% hydro, 2% fossil fuels, and 1% other).

http://www.visualcapitalist.com/energy-sources-power-world/


See the nifty interactive animation here: http://www.gocompare.com/gas-and-electricity/what-powers-the-world

Saturday, December 10, 2016

#Mexico - Analysis #Energy from EIA

Energy Information Administration (EIA) Logo - Need Help? 202-586-8800


Mexico is a major producer of petroleum and other liquids and is among the largest sources of U.S. oil imports, accounting for 9% of U.S. crude oil imports in 2015. While Mexico’s oil production has steadily decreased since 2005, they remain the fourth largest producer in the Americas after the United States, Canada and Brazil. While the petroleum sector’s role has significantly decreased in recent years, it still generated 6% of the country’s export earnings in 2015. In 2014 in an effort to address declines in domestic oil production, the Mexican government enacted constitutional reforms that ended the 75-year monopoly of Petroleós Mexicanos (PEMEX), the state-owned oil company on domestic oil.

For more information on the Mexico’s energy sector, visithttp://www.eia.gov/beta/international/analysis.cfm?iso=MEX  




Mexico - International - Analysis - U.S. Energy Information Administration (EIA)







Monday, October 24, 2016

The sorry state of #Venezuela's #oil fields



The decrepit state of aging oil fields is a crucial reason why Venezuela’s output is falling faster than that of any other major oil producer bar insurgency-riven Nigeria, despite having the world’s largest reserves.

Great article from Anatoly Kurmanaev on the sorry state of Venezuela's oil fields.

Venezuelan Oil Is Largely Staying in Ground or Going Up in Smoke

Anatoly Kurmanaev | Photographs by Miguel Gutiérrez for The Wall Street Journal

PUNTA DE MATA, Venezuela—This fading oil town has an eerie glow at night, illuminated by dozens of oil wells burning off precious oil and gas for lack of functioning equipment to process it.
...

Making matters worse, for every barrel of light crude burned off at Punta de Mata’s wells, Venezuela needs to spend dollars importing a barrel of diluent to mix with the very heavy oil produced in the country’s south.

“This is pure mismanagement,” said Carlos Bellorin, an oil analyst at IHS Inc. in London. “There’s no other rational explanation for such waste.”

The decrepid state of aging fields like Punta de Mata, which provide the bulk of Venezuela’s revenues, is a crucial reason why the country’s oil output is falling faster than that of any other major oil producer bar insurgency-riven Nigeria.

Venezuelan crude production shrank 11% to 2.3 million barrels a day in a year to September, according to government figures, and the consulting firm Medley & Associates expects the fall to accelerate in the next 12 months.

...

Overall, the number of working oil rigs in Venezuela declined by a quarter in the 12 months to September, according to Houston-based oil-field-service company Baker Hughes Inc. There are now more rigs drilling in Oman, where proven reserves are just 1.7% of Venezuela’s.

“I don’t think this government will be able to stabilize production even if the oil prices start to rise,” said Luisa Palacios, Medley’s Venezuela analyst....

Oilmen in Punta de Mata, once Venezuela’s major oil-producing hub, blame Venezuela’s production decline on government expropriations, corruption and collapsing wages that left state oil company Petróleos de Venezuela SA, known as PdVSA, increasingly hobbled.

The international oil service companies including U.S.-based Schlumberger Ltd., Halliburton Co. and Baker Hughes, which once drilled Punta de Mata’s wells and managed the flow of associated gas, are almost all gone, either squeezed out by billions of dollars of unpaid invoices or their local assets expropriated by the government.

As foreign companies began to idle drilling rigs and skilled workers left, output at the Northern Monagas Basin, which includes Punta de Mata, plunged two-thirds in the past decade, the steepest decline in the country, according to PdVSA’s regional managers.

Hit by the cash crunch, PdVSA is now trying to postpone $5-billion-worth of maturing bonds for three years, a move rating agency Standard & Poor’s said is “tantamount to default.”

PdVSA has already practically defaulted on its domestic debts. The company owed $19 billion to contractors—who provide everything from rigs to lunches—at the end of last year, according to its latest annual report.

After writing off $500 million in the country, Schlumberger, the world’s biggest oil-services provider, began to wind down operations at mature fields in June. It fired hundreds of workers, mothballed some rigs and said it would only work with PdVSA when prepaid in cash.

“Schlumberger just threw in the towel,” said Hector Navarro, a PdVSA production manager in Northern Monagas. “They left us to fend for ourselves.”

Earlier this year, a services subsidiary of Italian oil giant Eni SpA, called Saipem, removed its rigs from Northern Monagas and dismissed about 300 workers, according to the national oil union FUTPV. Saipem’s finance chief told investors in July that the company had “reduced almost to zero our operating exposure to Venezuela.”

As of this year, Halliburton will only drill for PdVSA when it is partnered with a foreign shareholder and has a better chance at getting paid, according to two company engineers in Venezuela.
Read the article online here:Venezuelan Oil Is Largely Staying in Ground or Going Up in Smoke - WSJ

Tuesday, September 13, 2016

Cheap shipping rates are redrawing the Global #Oil Market


Cheap shipping rates are redrawing long established oil-trade routes, with some vessels spending weeks at sea 


From Norway to the Bahamas, from Algeria to Australia.

Ultra-low crude prices
combined with cheap shipping rates are encouraging a host of exotic new
oil trading routes that wouldn't look out of place in the latest travel
brochures.

Oil
exporters are tapping into new markets as they attempt to work through a
glut in crude supplies that’s reshaping oil market economics and
redrawing decades-old shipping routes.



Read the whole article on Bloomberg here:  The Crazy, Mixed-Up Global Oil Market









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Wednesday, June 1, 2016

#MustRead! #Vitol: How the World's Largest #Oil Trader Makes Billions

In its 50-year history, the publicity-shy energy company hasn't seen an annual loss. Now business is becoming more competitive than ever.



An excellent piece on the trading giant that is Vitol from Bloomberg's Javier Blas and Andy Hoffman



Inside Vitol: How the World's Largest Oil Trader Makes Billions



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