This suggests two important changes for the USA in the energy arena. First is that America is no longer dependent on a potentially hostile foreign power for its energy.
The US holds more oil reserves than Saudi Arabia and Russia, the first time it has surpassed those held by the world’s biggest exporting nations.
Rystad Energy estimates oil in the US from existing fields, discoveries and yet undiscovered areas amounts to 264 billion barrels. That figure surpasses Saudi Arabia’s 212 B and Russia’s 256 B.
This suggests two important changes for the USA in the energy arena. First is that America is no longer dependent on a potentially hostile foreign power for its energy. Second is that the US will play a more significant role as an energy exporter. The billion dollar shipping docks in Corpus Christi will no doubt play significantly in exports to the Far East, like South Korea.
Socialist pipe dreams have taken another formerly well to do nation to near third world status. Venezuela’s crude production fell a whopping 12% just in December. 2017 production fell 29%. Over the past four years that economy has shrunk about 40%. Inflation topped 2,600% last year. The government has 70 senior managers of PdVSA. Generals with no energy experience have taken their place. And of course there has been under investment in the business. And given this situation, outside firms want no part of investing in Venezuela.
All that makes a probable default on the $60 B of debt owed to foreigners more likely. And this is a problem for Maduro’s advisor, the Castros in Cuba. Venezuela has been the energy provider.
Crude oil prices have had a great run to the mid $60s. The move was accelerated by a falling US Dollar. The Dollar Index has fallen from 103 to about 90. The dollar has overshot its previous low. But that may suggest it is time for a counter trend move up in the dollar. If so, watch dollar values this net week.
A move back to $60 would re-test the break out level of oil.Given the big run and a potential dollar bounce, this would not be surprising. On the daily charts oil is what technicians term over bought.
Heating oil has been trending sideways over $2 for the past week. This market has also rallied on the Big Chill in the northeast.
In the last 60 days unleaded gasoline has rallied from 1.66 to 1.88. This market is also in need of a breather.
Natural gas is doing its best to take out resistance at $3.20. It closed yesterday at $3.19.
The Energy Service ETF XES finally rallied from $12.50 to over $19. It too is now correcting. Energy shares XLE soared form $61 to $77 since August.
The weaker dollar has also supported a gold rally from $1240 to $1340. Silver needs to take out $17.40 and then $18.20 to really get going. Interestingly the metals seem to begin monthly rallies around the 25th of the month. So let’s give those markets another week to get going.
Social mood has been wildly ecstatic toward the stock market. The Dow just completed the shortest 1,000 point run in history. And the rise has grown more and more steep with each new round 1,000 level. Headlines also suggest lower put buying. A put is insurance against a stock market decline. It would have been better if the S & P had closed over 2805 yesterday but it fell a few points shy of that. The December to mid January period is typically a bullish period. Ending on a new high would have suggested even more upside. The Dow is unchanged up 17 from yesterday’s close in pre market trading.
There is always a mix of mood. It is easy to spot outbreaks of negative mood. The White House Press Corps was openly hostile to the Admiral pronouncing Trump in good health. Even the Obama Administration spoke up for the Admiral. Apparently Dick Durbin and Lindsey Graham were more interested in dishing some dirt on Trump with an alleged vulgar comment than saving the Dreamers at this point. And the government may shut down (does anyone know exactly what that means?) this weekend. Expect each party to blame the other. And the morning crew at MSNBC has suggested Democrats boycott the State of Union message. How much more hostile can mood become? And will that hostility eventually affect markets as it did during Watergate?
The bottom line is to watch the dollar and expect a pause in the upward march of energy prices. With the value of bitcoin falling daily, it is not surprising gold is back on the buy list.
Contact Dennis Elam at email@example.com.