Braggin’ Rights : Oil Continues To Curse ( your) Portfolio Results

 

My rant – the  curse of Cassandra :

Cassandra, daughter of the king and queen, in the temple of Apollo, exhausted from practising, is said to have fallen asleep – when Apollo wished to embrace her, she did not afford the opportunity of her body. On account of which thing :

when she prophesied true things, she was not believed.

I have written :

GET YOUR PORTFOLIO THE HELL OUT OF ENERGY : PRAYER ISN’T AN INVESTMENT STRATEGY  Dec.17,2015

Managed Accounts Year End Review and Forecast

in part

Oil/ Energy

I am very happy for the call in natural gas prices – out at $12 and into oil. When oil was above $100 we lessened positions and that is our saving grace in the past two weeks. We are not bottom feeders and will wait for a turn in the market before reentering drillers or producers.

On Friday November 27th, crude oil prices dropped to below $72 and the slide has continued into the weekend, with Brent crude oil at $70.15 as I write this post. Shares of major oil companies traded down on Friday. Our former energy sector holdings are down another between 4% and 11%, including SDRL, which dropped another 8% following Wednesday’s 23% plunge..

OIL Sector Update Dec. 20,2015

  • Official data show Saudis shipped more crude amid global glut
  • Saudi output exceeded 10 million barrels a day for ninth month

 

Saudi Crude Exports Rose in October to Most in Four Months

Saudi Arabia boosted crude exports in October to the highest level in four months, as the world’s biggest oil exporter added barrels to a worldwide supply glut that has contributed to a slump in prices.

Saudi shipments rose to 7.364 million barrels a day in the month from 7.111 million in September, according to the latest figures from the Joint Organisations Data Initiative. The monthly exports were the most since June and 7 percent higher than in October 2014, the data released on Sunday showed. JODI is an industry group supervised by the Riyadh-based International Energy Forum.

Saudi Arabia produced 10.28 million barrels a day in October, up from 10.23 million in September, the JODI figures showed.

Saudi Arabia led OPEC to decide on Dec. 4 to abandon the group’s limits on output amid efforts to squeeze higher-cost producers such as Russia and U.S. shale drillers out of the market. The Organization of Petroleum Exporting Countries had set a production target almost without interruption since 1982, though member countries often ignored and pumped well above it. The oversupply has pushed the price of benchmark Brent crude to almost a seven-year low and triggered the worst slump in the energy industry since the 2008 global financial crisis.

Brent for February settlement dropped 18 cents, or 0.5 percent, on Friday to $36.88 a barrel on the London-based ICE Futures Europe exchange. The crude grade has tumbled 36 percent this year.

Saudi Arabia pumped 10.33 million barrels a day in November, exceeding 10 million barrels in daily output for the ninth consecutive month, according to data compiled by Bloomberg. The Saudis have stuck to their one-year-old view that any output cuts won’t succeed in supporting prices unless big producers outside OPEC, including Russia and Mexico, also participate.

Crude exports fell in October from Iraq and Kuwait, OPEC’s second- and fourth-biggest producers, respectively, according to JODI. Iraq shipped 2.708 million barrels a day, down from 3.052 million barrels a day in September for the country’s fourth consecutive monthly decline, the data showed. Kuwait’s exports dropped to 1.905 million barrels a day in October from 2.008 million in the previous month, JODI said.

Iran, the fifth-biggest supplier in OPEC, exported 1.395 million barrels a day of crude in October, a marginal increase from 1.39 million in September, JODI figures showed

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Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be time to get rid of the security before more losses hit your portfolio.

 

Iran – Oil sanctions to be lifted in late 2015 or early 2016 – Adding 2 Million Barrels A Day

Iran has said it will offer about 50 energy projects to investors and plans to boost output by about 2 million barrels a day once the deal is in place.

Sanctions against Iran probably will be lifted within the first three months of 2016, after the International Atomic Energy Agency has confirmed the nation has curtailed its nuclear work, diplomats said last month. Once the restrictions are removed, relief is expected to fuel economic growth by lowering barriers to Iran’s oil exports and ending the isolation of its banks.

Iranian Oil

Iran has said it will offer about 50 energy projects to investors and plans to boost output by about 2 million barrels a day once the deal is in place. The Persian Gulf nation, with the world’s fourth-largest oil reserves, pumped 2.8 million barrels a day last month, according to data compiled by Bloomberg.

One nation, Japan, plans to triple its imports of Iranian crude once sanctions are lifted, the Iranian Oil Ministry’s Shana news agency said on Saturday, citing Seyed Mohsen Ghamsari, director of international affairs at National Iranian Oil Co. Japan will increase purchases to 350,000 barrels a day from 110,000 barrels, the agency said.

The U.S. waivers will result in the lifting of sanctions that now restrict or penalize non-U.S. companies for engaging in various economic activities, including buying Iranian oil and dealing with many Iranian banks, the U.S. officials said.

Narrow Categories

But for U.S. companies, sanctions will be eased only for certain narrow categories, the officials said. They said these include the export of civilian passenger aircraft, the import of spare aircraft parts and handicrafts from Iran, and some activities that subsidiaries of U.S. companies can conduct overseas.

In addition, Obama told reporters on Friday that sanctions “related to ballistic missiles, human-rights violations, terrorism — those, we will continue to enforce.”

In another sign of progress, IAEA monitors last week ended their 12-year investigation into the possible military dimensions of Iran’s nuclear past. Inspectors now have until Dec. 15 to draft and present a final assessment of their inquiry.

Iran’s nuclear work has been the focus of international scrutiny since February 2003, when Iranian officials told inspectors visiting Tehran of their plans to begin enriching uranium on an industrial scale. Subsequent discoveries that Iran had secretly procured nuclear materials and technologies led to years of mistrust. In May 2008 and again inNovember 2011, the IAEA publicly disclosed its suspicions about Iran’s activities.

Iran has consistently denied ever seeking a nuclear weapon.

Timeline to lifting sanctions:

  • Sunday — “Adoption Day” for July accord signed with world powers. Parties to the agreement begin meeting their commitments.
  • Nov. 30 — Iran prepares to end testing of advanced centrifuge cascades and store machines under IAEA seal.
  • Dec. 15 — IAEA to present its assessment of Iran’s past nuclear activities, which board will use “with a view to closing the issue.”
  • Late 2015-early 2016 — Oil sanctions to be lifted on “Implementation Day.” U.S. officials have suggested it will take at least two months from “Adoption Day” to reach this point.

    Saudi Arabia, the world’s largest oil exporter, is storing record amounts of crude in its quest to maintain market share as it cut shipments.

    Commercial crude stockpiles in August rose to 326.6 million barrels, the highest since at least 2002, from 320.2 million barrels in July, according to data posted on the website of the Riyadh-based Joint Organisations Data Initiative. Exports dropped to 7 million barrels a day from 7.28 million.

    “The fall in Saudi crude exports reflects the market reality,” Mohammed Ramady, an independent London-based analyst, said Sunday by phone. “It’s normal to see this fall knowing that the market is becoming highly competitive, with many countries in OPEC selling at discounts and under-pricing the Saudi crude.”

    Crude inventories have been at record highs since May, a month before Saudi Arabia’s production hit an all-time high of 10.56 million barrels a day. The nation has led the Organization of Petroleum Exporting Countries in boosting production to defend market share, abandoning its previous role of cutting output to boost prices.

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Credit Suisse: Oil Has Stabilized Because Saudis Got What They Wanted

 

Forget wealth effect. The global equity market can’t have a smooth bull run if oil prices are tanking.

This is because commodity-related capital expenditure accounts for around 30% of total capex globally, so even though consumers may benefit from cheaper oil, companies are hit first.Credit Suisse estimates that the fall in commodities capex has taken at least 0.8% off the U.S. economic growth in the first half this year and 1% off global growth over the last year.

But the worst is over, according to analyst Andrew Garthwaite and team. They listed three reasons: 1. demand for oil has stabilized; 2. non-OPEC production has peaked; 3. Saudi Arabia has achieved its goal of deterring new entrants.

Since Saudi Arabia is the wild card, Credit Suisse analysts took pains to explain their position:

We believe that the key variable is Saudi Arabia. If it were not for Saudi Arabia, then we fear that oil would have to behave like other commodities and if there is excess supply fall to levels where a third of production is below the cash cost and, given the likely fall in commodity currencies, this in turn would lead to a much lower oil price (maybe down to $30/barrel).

This leads to the question ‘Can Saudi Arabia support the oil market?’. We think the answer is yes. They control the vast majority of spare capacityaccording to our oil team and 13% of output.

Their clear aim was to restore market share against non-OPEC and avoid being a swing producer (and thus not repeat the 1980 to 1985 experience, when their oil production fell by 70% as they sought to defend the oil price) and also limit the growth in alternative energies. The key is clearly at what point they have achieved their objective. The issue is nearly always the same – costs fall much more quickly than expected, partly because commodity currencies fall and partly because of cost deflation.

Moody’s highlight that the breakeven for median shale is around $51pb. Thus it may be the case that around the current oil price, Saudi Arabia believe they have achieved their objective of pricing out new shale projects.

Additionally the reduction in the oil price has come at a cost, with the budget deficit estimated to be 20% of GDP in 2015 (IMF Article IV – Saudi Arabia). While government debt to GDP is very low at c1%, we view the recent selling of Sama reserves and the first sovereign bond issue since 2007 as signs that there is some degree of stress.

Brent crude jumped another 2.2% to trade at $49.58 recently after a 5% rally overnight.

Oil stocks rallied. CNOOC (883.Hong Kong/CEO) advanced 12.1%, China Oilfield Services(2883.Hong Kong) gained 9.5%, PetroChina (857.Hong Kong/PTR) was up 7.8%. Sinopec(386.Hong Kong/SHI) jumped 6.8%. The Hang Seng China Enterprises Index advanced 4%. Overnight, the United States Oil Fund (USO) rose 4.9%.

Goldman Cuts Oil Price Forecast – that could drive prices as low as $20 a barrel.

crude oil: Oil is spilling from the barrel, isolated on white background

 

SEOUL (Reuters) – Crude oil prices fell on Friday as a stronger dollar, Saudi Arabia’s dismissal of a producer summit and a lower price forecast by Goldman Sachs weighed, with prices headed for a weekly loss despite rallying in the previous session.

October Brent, the global oil benchmark, decreased 51 cents to $48.38 a barrel as of 0659 GMT after it settled up $1.31, or 2.8 percent, at $48.89 on Thursday.

October U.S. crude futures lost 65 cents to $45.27 a barrel after it settled up $1.77, or 4 percent, at $45.92 a barrel.

Saudi Arabia believes a summit of heads of states of oil producing countries would fail to produce concrete action toward defending oil prices, sources familiar with the matter said on Thursday.

The comments followed a meeting of Gulf Arab oil ministers with Qatar’s emir in Doha, at which a Venezuelan proposal for an OPEC and non-OPEC summit was discussed.

The U.S. dollar edged higher in Asian trading on increased chances of more easing in Japan. A firmer U.S. dollar makes oil more expensive for holders of others currencies.

Goldman Sachs forecast on Friday 2015 WTI prices at $48.10 per barrel from an earlier estimate of $52 per barrel. It also lowered the 2016 WTI price forecast to $45 per barrel from $57 per barrel earlier.

Goldman also predicted 2015 Brent prices at $53.70 per barrel from $58.20 per barrel earlier, while it saw 2016 Brent prices at $49.50 per barrel from $62 per barrel earlier.

Oil prices rallied on Thursday after U.S. Energy Information Administration (EIA) data showed demand for gasoline over the latest four-week period rose almost 4 percent from a year ago.

Crude inventories were up 2.6 million barrels to 458 million barrels in the past week, compared with analysts’ expectations for an increase of 933,000 barrels.

Yet crude stocks at the Cushing, Oklahoma, delivery hub fell by 897,000 barrels to 56.41 million barrels, EIA said.

“Crude oil stocks appear to be stabilizing as refinery demand continues to fall, not surprisingly as refining margins have considerably weakened,” BNP Paribas said in a note.

Russia’s energy minister expects cuts in global shale oil production to help stabilize the oil market. Alexander Novak also reaffirmed that Russia, one of the world’s top oil producers, would not cut its own production.

Asian shares edged higher on Friday following gains on Wall Street while the dollar steadied, but gains were capped by uncertainty over whether the U.S. Federal Reserve will raise interest rates next week.

The global surplus of oil is even bigger than Goldman Sachs Group Inc. thought and that could drive prices as low as $20 a barrel.

While it’s not the base-case scenario, a failure to reduce production fast enough may require prices near that level to clear the oversupply, Goldman said in a report e-mailed Friday. The bank cut its forecast for Brent and WTI crude through 2016 on the expectation that the glut will persist on OPEC production growth, resilient supply from outside the group and slowing demand expansion.

“The oil market is even more oversupplied than we had expected and we now forecast this surplus to persist in 2016,” Goldman analysts including Damien Courvalin wrote in the report. “We continue to view U.S. shale as the likely near-term source of supply adjustment.”

Goldman trimmed its 2016 estimate for West Texas Intermediate to $45 a barrel from a May projection of $57. The bank also reduced its 2016 Brent crude prediction to $49.50 a barrel from $62.

WTI for October delivery fell as much as $1.16, or 2.5 percent, to $44.76 a barrel on the New York Mercantile Exchange and is heading for a weekly decline. Prices are down 16 percent this year. Brent for October settlement is 3.6 percent lower this week.

Global Glut

Oil in New York has slumped more than 25 percent from its June closing peak amid signs the glut will persist. Leading members of the Organization of Petroleum Exporting Countries are sustaining output, while Iran seeks to boost supply once international sanctions are lifted. U.S. stockpiles remain about 100 million barrels above the five-year seasonal average.

“We now believe the market requires non-OPEC production to shift from our prior expectation of modest growth to large declines in 2016,” Goldman said. “The uncertainty on how and where that adjustment will take place has increased.”

U.S. Output

The U.S. pumped 9.14 million barrels a day of oil last week, almost 3 million barrels above the five-year seasonal average, according to data from the Energy Information Administration. While the EIA this week cut its 2015 output forecast for the nation by 1.5 percent to 9.22 million barrels a day, production this year is still projected to be the highest since 1972.

U.S. output will need to decline by 585,000 barrels a day next year and other non-OPEC production will need to fall by 220,000 barrels a day for the global surplus to end by the fourth quarter of 2016, Goldman said. Saudi Arabia, Iraq and Iran will drive supply growth from OPEC, the bank said.

Shale oil production in the U.S. will drop 9 percent next year as a crude price below $50 a barrel “slams brakes” on years of growth, the International Energy Agency said in its monthly market report Friday. Output is forecast to fall by 385,000 barrels a day next year to 3.9 million barrels a day. Total non-OPEC supply will drop by 500,000 barrels a day next year, according to the IEA.

OPEC, the supplier of 40 percent of the world’s crude, has produced above its 30-million-barrel-a-day quota for the past 15 months. Iranian Oil Minister Bijan Namdar Zanganeh has vowed to increase output by 1 million barrels a day once sanctions are removed as the nation seeks to regain market share.

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OPEC Producers Cut Oil Prices to Asia

Oil Barrels

 

Battle for Market Share

(Bloomberg) — Iraq and Iran joined Saudi Arabia in cutting their March crude prices for Asia to the lowest level in more than a decade, signaling the battle for a share of OPEC’s largest market is intensifying.

Iraq’s Basrah Light crude will sell at $4.10 a barrel below Middle East benchmarks, the lowest since at least August 2003, the Oil Marketing Co. said Tuesday. National Iranian Oil Co. lowered its official selling price for March Light crude sales to a discount of $2.10 a barrel, the lowest since at least March 2000, according to a company official who asked not to be identified because of corporate policy.

The cuts come after Saudi Arabia, the largest crude exporter, reduced pricing to Asia last week to the lowest in at least 14 years. The Organization of Petroleum Exporting Countries left its members’ output targets unchanged at a November meeting, choosing to compete for market share against U.S. shale producers rather than support prices. Iraq is the second-biggest producer in OPEC and Iran is fourth.

“This is an effort by some producers to protect market share,” Sarah Emerson, managing principal of ESAI Energy Inc., a consulting company in Wakefield, Massachusetts, said by phone Tuesday. “It’s really straightforward; cutting prices is how you keep your foot in the door.”

Increasing Competition

Middle Eastern producers are increasingly competing with cargoes from Latin America, Africa and Russia for buyers in Asia. Oil prices have dropped about 45 percent in the past six months as production from the U.S. and OPEC surged.

The International Energy Agency said Tuesday that the U.S. will contribute most to global growth in oil supplies through 2020 as OPEC’s attempts to defend its market share will hurt other suppliers including Russia more.

“If they go out and sell at a higher price, they won’t sell much,” John Sfakianakis, Middle East director at Ashmore Group Plc, a London-based investment manager, said in an interview in Dubai Tuesday. “For the Saudis, it’s market share at any cost. Saudi is the leader in this and the others have to follow the leader.”

Iran’s output rose to 2.78 million barrels a day in January from 2.77 million a month earlier as Iraq boosted supply to 3.9 million from 3.7 million, according to a Bloomberg survey of oil companies, producers and analysts. Production in Saudi Arabia climbed 220,000 barrels a day to 9.72 million last month.

Saudi Views

Saudi Arabia won’t balance global crude markets by itself even as prices fall “too low for everybody,” Khalid Al-Falih, the chief executive officer of Saudi Arabian Oil Co., said at a conference in Riyadh on Jan. 27. The kingdom’s Oil Minister Ali Al-Naimi has said producers outside of the group should trim their output first.

Brent crude, the benchmark for more than half of the world’s oil, rose 20 cents a barrel, or 0.4 percent, to $56.63 on the London-based ICE Futures Europe exchange Wednesday. The European crude touched $45.19 on Jan. 13, the lowest since March 2009. West Texas Intermediate, the U.S. benchmark, gained 49 cents, or 1 percent, to $50.51 a barrel on the New York Mercantile Exchange after falling 5.4 percent on Tuesday.

“This is a global market that’s oversupplied,” Emerson said. “Late March and early April are in normal times a period of weak demand, so you have to be rather aggressive now if you want to sell your oil.”

To contact the reporters on this story: Anthony DiPaola in Dubai atadipaola@bloomberg.net; Mark Shenk in New York at mshenk1@bloomberg.net

To contact the editors responsible for this story: David Marino atdmarino4@bloomberg.net; Nayla Razzouk at nrazzouk2@bloomberg.net Charlotte Porter

Oil Sector – It Will Be Ugly : Protect your Assets

OPEC Gusher to Hit Weakest Players, From Wildcatters to Iran

The refusal of Saudi Arabia and its OPEC allies to curb crude oil output in the face of plummeting prices has set the energy world on a painful course that will leave the weakest behind, from governments to U.S. wildcatters.

A grand experiment has begun, one in which the cartel of producing nations — sometimes called the central bank of oil — is leaving the market to decide who is strongest and how to cut as much as 2 million barrels a day of surplus supply.

Oil patch executives including billionaire Harold Hamm have vowed to drill on, asserting they can profit well below $70 a barrel, with output unlikely to fall for at least a year. Marginal producers in less profitable U.S. shale areas, as well as countries from Iran to Russia and operations from Canada to Norway will see the knife sooner, according to analyses by Wells Fargo & Co., IHS Inc. and ITG Investment Research.

“We’re in a very nerve-wracking environment right now and will be for probably the next couple of years,” Jamie Webster, senior director for global crude markets at IHS said today in a phone interview. “This is a different game. This isn’t just about additional barrels, this is about barrels that are going to keep coming and keep coming.”
Investors punished oil producers, as Hamm’s Continental Resources Inc. fell 20 percent, the most in six years, amid a swift fall in crude to below $70 for the first time since 2010. Exxon Mobil Corp. fell 4.2 percent to close at $90.54 in New York. Talisman Energy Inc., based in Calgary, was down 1.8 percent at 3:00 p.m. in Toronto after dropping 14 percent yesterday.

U.S. Supplies

A production cut by the 12-member Organization of Petroleum Exporting Countries would have been the quickest way to tighten the world’s oil supplies and boost prices. In the U.S., supply is expected either to remain flat or rise by almost 1 million barrels a day next year, according to the Paris-based International Energy Agency and ITG.

That’s because only about 4 percent of shale production needs $80 or more to be profitable. Most drilling in the Bakken formation, one of the main drivers of shale oil output, returns cash at or below $42 a barrel, the IEA estimates.

Many expect reductions to U.S. output to occur slowly because of a backlog of wells that have already been drilled and aren’t yet producing, and financial cushioning from the practice of hedging, in which producers locked in higher prices to protect against market volatility, according to an Oct. 20 analysis by Citigroup Inc.

Production Slowdown

With a sustained price drop to $60 a barrel, shale drilling would face significant challenges, according to Citigroup and ITG, especially in emerging fields in Ohio and Louisiana, where producers have less practice. ITG estimates it will take six months before lower prices slow production growth from U.S. shale, which is responsible for propelling the country’s production to the highest in more than three decades.

“It’s going to be very producer-specific,” said Judith Dwarkin, chief energy economist at ITG in Calgary. “Companies have to revise their budgets, then you see the laying down of rigs, then you see the fewer wells being drilled, then you see the natural decline rates starting to have more of an effect.”

Drilling in Western Canada may drop by 15 percent in 2015, according to a report today by Patricia Mohr, an economist at Bank of Nova Scotia in Toronto.

Different Strokes

The market pressure will hit shale companies in different ways. Many have spent years honing their operations to pull the most oil out of every well at the lowest cost, a process that can be as much art as science at the nexus of geology, engineering and infrastructure. That experience means some producers, such as EOG Resources Inc. and ConocoPhillips, can turn a profit at $50 a barrel.

Those companies will now capitalize on that expertise to keep drilling wells, and so far have even promised to boost production.

The idea that lower prices will pressure shale producers to produce less oil is “a fundamental error,” said Paul Stevens, a distinguished fellow at Chatham House in London. Such thinking has focused on how much it costs to drill new wells in new fields, ’’ he said. “But what really matters is the price at which it is no longer economic to produce from existing fields, and that is very much lower.”

Worst Pain

Some companies won’t be as fortunate, especially smaller operators that rely heavily on debt and are focused on new areas, where the most efficient production techniques are in the early stages of being understood. Such producers have for years outspent cash flow to develop properties that could pay off big in the future.

Goodrich Petroleum Corp. is one example. With a market capitalization of just $269 million, the upstart producer is developing a prospect in Louisiana and Mississippi that one rival called possibly one of the last great opportunities in North America. But drillers in the Tuscaloosa Marine Shale need oil prices at about $79.52 a barrel, according to Bloomberg New Energy Finance. Goodrich fell 34 percent to 6.05, the most ever.

Wells drilled by Hess Corp. in Ohio’s Utica formation, which has yet to produce significant volumes and is held in high esteem by many in the industry, also require nearly $80 a barrel for profitability, according to Citigroup.

Offshore, Too

The punishment wasn’t limited to shale. The day’s worst performing oil producer was offshore specialist Energy XXI Ltd., which has its principal office in Houston. It lost a record 37 percent of its value, falling to $4.01.

With cash flow shrinking from lower prices, the company may not be able to reduce debt until the market rebounds, Iberia Capital Partners analyst David Amoss, based in New Orleans, wrote today in a note cutting his rating to hold from buy. As of Sept. 30, Energy XXI reported net debt of $3.7 billion.

Plunging oil markets already have begun to pressure governments that rely on higher prices to finance their budgets, fuel subsidies to citizens and expand drilling. Venezuela’s oil income has fallen by 35 percent, President Nicolas Maduro said on state television Nov. 19.

Nigeria increased interest rates for the first time in three years on Nov. 26 and devalued its currency. The government is planning to cut spending by 6 percent next year, Finance Minister Ngozi Okonjo-Iweala said Nov. 16. Both Nigeria and Venezuela are part of OPEC.

‘Real Victims’

Saudi Arabia has enough cash stockpiled to finance its budget for more than 20 years at an oil price of $80 a barrel, according to an Oct. 16 analysis from CIBC World Markets Corp. Russia has about six years of financial reserves at that price, but Iraq, Nigeria and Iran all have less than two years. Venezuela has less than six months, based on the analysis.

Several countries within OPEC such as Iran, Iraq, Nigeria and Venezuela, as well as non-OPEC states such as Russia, Canada and Norway, “will end up being the real victims of lower oil prices in 2015 and beyond,” Roger Read, an analyst at Wells Fargo, said today in a note to investors. The countries “are unlikely to be able to maintain their production trends in the face of today’s oil price declines.”

“It’s pretty clear to me that the Saudis are no longer interested in being the world’s central banker for oil,” said John Stephenson, who manages C$50 million ($44 million) at Toronto-based Stephenson & Co. as chief executive officer. “It’s going to be ugly.”

I am very happy for the call in natural gas prices – out at $12 and into oil. When oil was above $100 we lessened positions and that is our saving grace in the past two weeks. We are not bottom feeders and will wait for a turn in the market before reentering drillers or producers.

On Friday November 27th, crude oil prices dropped to below $72 and the slide has continued into the weekend, with Brent crude oil at $70.15 as I write this post. Shares of major oil companies traded down on Friday. Our former energy sector holdings are down another between 4% and 11%, including SDRL, which dropped another 8% following Wednesday’s 23% plunge:

Company                                   (Ticker)                        Price Change
Energy Transfer Partners LP (NYSE:ETP)             $ 65.17 -4.13%
Exxon Mobil Corporation (NYSE:XOM)                $ 90.54 -4.17%
Chevron Corporation (NYSE:CVX)                       $108.87 -5.42%
ConocoPhillips (NYSE:COP   )                                 $ 66.07 -6.72%
Vanguard Natural Resources, LLC (NASDAQ:VNR) $ 23.22 -6.86%
Seadrill Ltd. (SDRL)                                                  $ 14.66 -8.32%

Have you avoided this sector – you would have been better off to follow our advice in 2014 and now you have to decide for 2015.
No one – and I am not being humble here – can project the future with great accuracy but our clients continue to do very well and we offer that experience to you.

Fees : 1 % annual set up and a performance bonus of 20 % – only if we perform.

You can withdraw your funds monthly if you require an income stream.

 

YEAR END UPDATE AND FORECAST

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November 2014 – 40 % cash position

Year End Review and Forecast

Contact information:

To learn more about portfolio management ,asset protection, trusts ,offshore company formation and structure for your business interests (at no cost or obligation)

Email info@jackbassteam.com or

Call Jack direct at 604-858-3202

10:00 – 4:00 Monday to Friday Pacific Time ( same time zone as Los Angeles).

A decade of increasing productive capacity has fattened supplies of commodities just as the world economy grows less commodity-intensive and investment demand wanes with traditional equity and bond markets performing well.

The idea that commodities were even a proper investment asset class for long-term investors was never fully demonstrated. Commodity prices tend to be mean reverting through successive cycles rather than instruments that produce cash income or build economic value.

Yet many in the financial industry promoted the idea of a “supercycle” fed by global industrialization and “peak oil” supply constraints. For sure, commodities look quite oversold in the short term and sentiment has turned severely against them, supporting the chances for a trading bounce or pause in the declines.

Yet even if the lows are in for oil or gold, the big picture is now looking decidedly less “super” for long-term commodity bulls. In one representative example of flagging investor interest in commodities, assets in the bellwether Pimco Commodity Real Return Strategy fund (PCRIX) have fallen below $13 billion – down by more than a third in two years.

 

Oil Bear Market

OPEC’s Biggest Supply Boost Since ’11 Spurs Bear Market

OPEC increased oil production by the most in almost three years, helping to drive prices toward a bear market. Iran and Saudi Arabia offered their oil at the deepest discounts since 2008, adding to speculation that members of the group are competing for market share.

The Organization of Petroleum Exporting Countries, which supplies 40 percent of the world’s oil, increased output by 402,000 barrels a day in September to 30.47 million, the group’s Vienna-based secretariat said in a monthly report. Iran matched Saudi Arabia yesterday by cutting the price of its main export grade to Asia by $1 a barrel, according to two people with knowledge of the pricing decision.

Brent futures, the international benchmark, traded at a four-year low today. Saudi Arabia told OPEC it raised output 11 percent last month, adding to speculation it will seek to preserve its share of export markets. Crude production is mounting in the U.S., Russia and Libya, while the pace of demand growth is lower as the economy slows in China, the world’s second-largest oil consumer.

“It’s a fight for market share out there at the moment,” Ole Sloth Hansen, an analyst at Saxo Bank A/S, said by e-mail today. “OPEC will have to come up with something otherwise the market will view it as a free invitation to carry on selling.”

Libyan Return

OPEC production last month climbed by the most since November 2011 and was the highest in more than a year, the group’s data show. Libya bolstered supplies by 250,600 barrels a day to 787,000 and Iraq added 134,500 to 3.164 million, according to secondary sources cited by the report. That more than compensated for an estimated drop of 50,400 barrels a day in Saudi output to 9.605 million.

Saudi Arabia’s own communications to the group showed an increase of 107,100 barrels a day to 9.704 million in September, according to separate data in the report.

Price cuts announced last week by Saudi Arabia, matched by Iran yesterday, fueled speculation it may let oil fall rather than cut production and cede market share. OPEC members in West Africa are also showing signs of greater competition, said Julian Lee, an oil strategist at Bloomberg First Word in London. Nigerian sales of crude for November have been slower than usual after Angola moved more quickly to reduce prices, he said.

Saudi Pressure

Brent for November settlement slid to $88.11 a barrel on the London-based ICE Futures Europe exchange today, the lowest in almost four years. West Texas Intermediate, the U.S. benchmark, dropped as low as $83.33 a barrel on the New York Mercantile Exchange, the least since July 3, 2012.

OPEC’s September production increase contributed to the fall of more than 20 percent in both grades from their June peaks, said Saxo Bank’s Hansen. A drop of that size meets a common definition of a bear market.

“Saudi Arabia is leaning back a bit to force better co-operation” from other members on production cuts, Thina Saltvedt, an analyst at Oslo-based Nordea Markets, said by phone. “The demand side is getting weaker and weaker. It doesn’t look good if OPEC isn’t willing to tighten things up.”

OPEC’s output in September was about 300,000 barrels a day higher than the daily average of 30.2 million the group expects is needed in the fourth quarter. Its 12 members will probably cut either their output or formal production target of 30 million barrels a day when they next meet on Nov. 27 in Vienna, said 11 of 20 analysts surveyed by Bloomberg News yesterday. Estimates ranged from a reduction of 500,000 to 1 million barrels a day.

The organization kept unchanged annual forecasts for global oil demand, and the amount of crude OPEC will need to provide, for this year and next.

“The recovery in gasoil consumption for industry and transportation use, along with emerging winter demand” will support the market in coming months, it said.