Sunday, March 30, 2014


     Springtime brings ... more abundant sunshine, earlier, later, and higher in the sky.  Bees, flowers, songbirds, rain.  And time to rearrange the portfolio.

     For the time being, natural gas seems to have run its course.  Unexpected (by me), the remaining inventories in the country have been run down below 950 bcf .... this is a frightening number or at least it should be, but its a bottom.  The 5 year average for this point in the year is around 1600 and 950 represents less than a two-week supply.  Everybody understands that it will be rising for the next 6 months.  The big question is, "Will we be able to replenish the storage back to a normal high."  With demand for vehicles, for fertilizer, for chemical feedstocks, and for electricity for air conditioning all at all-time highs, well, I hardly think so.  Take into account also that among the exciting new tight gas shale formations, the Haynesforth, Permian, Denver Basin, Great Green River Basin, etc .... guess what?  Production is now declining already in all of them except the Marcellus.

     So we definitely need to revisit this issue when the weather becomes an issue again.  Note that a hot summer could have a similar impact as a cold winter.

     However, driving season is now upon us.  Year after year after year, the prices of crude typically bottm around February or March, then start climbing through the spring and summer.  Year after year, the -prices of the oil company stocks follow suit.

     This year, we have the added silliness of the greedy bankers who overstepped their bounds in the Ukraine, to add ether to the mix.  Investors are already beginning to figure out what the eventual inevitable results of their misbegotten policies are going to be.  Russia is simply going to accelerate its drive to sell more and more gas and oil to China and India.  They are better customers in the first place, guaranteed to increase demand over the long term.  In the second place, they don't exhibit the insufferable arrogance and pugnacity of the we4stern european and north american former imperialists.  third, they are capable of paying in gold, instead of the worthless paper that our bankers keep multiplying.

    And, there is still the little craziness about the Keystone.  Its not a big deal, its just a stupid one, where politics has reigned supreme over common sense and the real needs of the society.  surely no one thinks that blocking the pipeline will have any impact whatever upon production in Athabasca.  The only thing it does is to tighten the noose a little further around US energy needs, because the Canadians are working feverishily to facilitate selling their precious oil to other customers, instead, for a higher price.

     So, suddenly its time to buy Suncor already.  Actually the time was at the beginning of the week, because I'm certainly not the only person to come to these conclusions and the stock suddenly jumped up by 5% the last several days.  From a low of 32.50 it has gone to 34.50.  It was very interesting as well to see WTI rising while Brent actually fell.  By June it should be back to its normal 36-38 range, assuming the warmongers are kept in check.  But if hotter heads begin to prevail and the steady drumming of another losing war crescendos it will climb a lot higher than that.

    At that point we can go back and revisit gas and coal ....

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