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March 5th, 2015

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editorials

 
Oil Market Update
Clive Maund  Feb 24  

A Daily Energy Economics Dozen
Ferdinand E. Banks  Feb 18  

Low Oil Prices Are an Act of Economic Warfare: Veteran Investor Bob Moriarty
The Energy Report  Feb 13  

Cheap Oil Spells Opportunity to Some
Bob Moriarty  Feb 12  

XOI Index : Arca Oil & Gas Index
Thomas Chaize  Jan 23  

»» more editorials in the archives

market data


Ux U3O8 Price (Uranium)Mar 2nd, 2015
$39.25 +$0.50 www.uxc.com

»View Commitment of Traders.

expert analysis & newsletter briefs

Pan Orient Energy Corp.

"Pan Orient Energy Corp. released the results of an independent resource evaluation completed by Sproule Unconventional Ltd. of the Sawn Lake oil sand project. . .the best case contingent resource estimated net to Andora is unchanged at 214 MMbbl, 154 MMbbl net to the company's 71.8% ownership in Andora. . .we maintain our Buy and $4 target." (3/4/15) - Bill Newman, Mackie Research Capital

Pan Orient Energy Corp.

"Pan Orient Energy Corp. released the results of an independent resource evaluation completed by Sproule Unconventional Ltd. of the Sawn Lake oil sand project. . .the best case contingent resource estimated net to Andora is unchanged at 214 MMbbl, 154 MMbbl net to the company's 71.8% ownership in Andora. . .we maintain our Buy and $4 target." (3/4/15) - Bill Newman, Mackie Research Capital

Fission Uranium Corp.

"Fission Uranium Corp. has announced that it has discovered a new area of high grade mineralization. . .this intercept immediately puts the relatively shallow R600W zone into elite class and significantly improves potential project economics, as it is a land-based zone." (3/3/15) - Rob Chang, Cantor Fitzgerald

Fission Uranium Corp.

"We recommend Fission Uranium Corp. as a top pick with a Buy rating and CA$2.40/share target. Yesterday, Fission announced another large hit 555m west of Triple R at the R600W zone, along the same conductor as the 106 Mlb Triple R deposit. . .we had smoke at R600W before but make no mistake this is a new discovery and likely a game changer." (3/2/15) - David Talbot, Dundee Capital Markets

Blackbird Energy Inc.

"Blackbird Energy Inc. will be announcing the initial results from its first two wells drilled and if successful, will prove up 2535 sections of its lands; I wouldn't be surprised to see the company's valuation increase substantially on that news. Not only is Blackbird in the middle of drilling two wells, but it just announced another land acquisition last week that should prove to be extremely accretive for shareholders. . .it is on the verge of something special, and you don't want to miss this opportunity." (3/2/15) - Etienne Moshevich, Alphastox.com


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Pan Orient Energy (TSX-V:CAN)
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Quantum Energy (QEGY.PK:OTC)
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The Energy Report ()
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Torchlight Energy (NASDAQ: TRCH)
Oil Drilling and Working Interest in Oil Projects
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from the publisher
  Robert J. Moriarty

Welcome to 321energy.



Here's What Will Send Oil Prices Back Up Again


Martin Tillier
admin@Oilprice.com
http://oilprice.com/
March 4th, 2015

Oil's rapid decline since August of last year has been dramatic. To listen to some commentators you would also think it is unprecedented and irreversible. Those claiming that oil will continue to fall from here and remain low for evermore, however, are flying in the face of both history and common sense. The question we should be asking ourselves is not if oil prices will recover, but when they will.

WTISinceJan85

Figure 1: Inflation adjusted WTI since Jan 1985. Chart from Macrotrends.net

From June of 2014 until now, the price of a barrel of West Texas Intermediate (WTI) crude oil has fallen approximately 57 percent. As the above chart shows, there have been drops of a similar percentage five times in the last 30 years. The rate of recovery has been different each time, but recovery has come. In addition, since 1999 the chart shows a consistent pattern of higher lows. In other words, oil is a volatile market, but prices are in a long term upward trend.

Charts can only tell us so much, however. Even a long term trend can be broken if fundamental conditions change, and that, say those predicting that oil will never recover, is what has happened. There is no doubt that supply has increased. Hydraulic fracturing, or "fracking" technology has unlocked reserves of oil and natural gas previously thought of as unrecoverable. Supply alone, however, doesn't determine price. We must also consider demand, and that has been increasing too.

WorldLiquidFuelsProduction

According to this chart, from the U.S. Energy Information Agency (EIA), demand has been increasing along with supply since 2010. Admittedly there has been a production surplus since the beginning of 2014 but that is nothing new and is forecast to be back in balance by the end of this year. The increased production, then, is in response to increasing demand; hardly a recipe for a protracted period of low prices. The supply situation makes it unlikely that the recovery will be rapid, but a gradual move up over the next few years is the only logical conclusion.

The low price brigade cites another factor in making their predictions, the rise of alternative energy sources. There is no doubt that there have been significant advances in that area, particularly in wind and solar power, but, according to the EIA, renewables currently account for 11 percent of the world's energy consumption. That number will undoubtedly grow in the coming years, but, whether we like it or not, oil consumption still looks set to grow over the next few years. Fracking can fill some of that demand, but the simple fact remains that oil is still used extensively, and we are using more of it every year. The price simply cannot stay low for an extended period, but while it does it will delay research and infrastructure spending on renewables, slowing the pace of their adoption.

Any increase in price would be hastened by a decision from OPEC and Saudi Arabia in particular, to reduce production. Right now they say that that is not on the cards, and why would they cut back? Their attitude seems to be that the oversupply was not their doing, and as their oil is cheap to produce, they can sit back and watch those who did cause the problem, most notably the upstart American companies, suffer. OPEC has always played the long game and will undoubtedly do so again, but once the lesson has been taught the pressure to restrict supply somewhat will mount. Again it may take time, but it will probably come.

History tells us that the price of oil will bounce back, but so does basic logic. Oil is a finite resource that we are using at an increasing rate, and as long as that situation remains, the laws of supply and demand mean that the price must recover. That is a good thing. As long as oil remains cheap there is little incentive to invest in the alternatives that we will inevitably need someday, nor to reduce our consumption of what is essentially a dirty fuel source. So, enjoy low fuel prices while you can, but don't expect them to last forever.




Martin Tillier
admin@Oilprice.com
http://oilprice.com/
March 4th, 2015



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