Saturday, October 25, 2014

Crude Has Likely Hit Rock Bottom

In the past, we’ve discussed at length the structural problems facing Crude. So the pressure the energy markets are under, both from the demand and supply sides, should come as no surprise. This double whammy to the Crude market is not likely to be resolved overnight; demand-supply issues require time to work through a market.
Through hydraulic fracking and a massive influx of investment capital, the US has again become a major oil producer. But it’s the speed with which new supply from the US has come on line that has taken the market by surprise and rocked prices.
The 4 million plus barrels of extra oil that the US is suddenly producing is causing a problem for exporters like Saudi Arabia, who now need to find new markets for their oil. Most of the world’s oil is not sold in futures contracts for delivery one to three months out. Rather oil contracts are long term in nature, made over 1 to 3 year periods. And the competition for existing oil markets has been fierce, forcing suppliers to drastically cut their prices relative to spot. (more)

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Meanwhile, This Is Who Is Quietly Buying All The Cheap Oil

from Zero Hedge

With the US Shale Oil industry up in arms, Venezuela screaming, and Russia awkwardly quiet (as the Ruble slides with the falling oil price stabilizing domestic inflows), the ‘secret’ Saudi-US oil deal that pressured prices for crude down to $80 (18-month lows today) has ‘hurt’ a lot of the world’s producer nations. However, as Bloomberg reports, there is one nation that is very grateful. The number of supertankers sailing toward China’s ports surged to a nine-month high as over 80 very large crude carriers (VLCCs) – the industry’s biggest ships – sail toward the Asian country’s ports. At an average of 2 million barrels each, the 160 million barrels will help refill China’s 727 million barrel SPR which it started in 2012.
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2015 Natural Gas Forecast

You've got one more week to become a gas bull.
I'd give myself the same deadline if my readers and I weren't already expecting a natural gas comeback. Personally, I find it nearly impossible not to have a strong outlook for gas.
Over the last few years, ever since gas prices bottomed out, we've talked about the growing role the fuel is playing in the United States, whether it is against the coal industry or even taking on renewables like wind.
Investors that passed on gas last winter undoubtedly regretted their inaction. But with prices down 25% since last June, is the market giving you a second chance?
I have a feeling the bearish sentiment we've been seeing far too often lately will start swinging the other way. (more)

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Nu Skin Enterprises, Inc. (NYSE: NUS)

Nu Skin Enterprises, Inc. develops and distributes anti-aging personal care products and nutritional supplements under the Nu Skin and Pharmanex brands. It offers skin-care systems and treatment products, including age LOC Galvanic Spa System, age LOC Galvanic Body Spa, and age LOC Transformation anti-aging skin care system, as well as other cosmetic, personal, and hair care products. The company also provides age LOC TR90 weight management and body shaping systems; LifePak; age LOC R2 nutritional supplement; and age LOC transformation daily skin care system. It is involved in the research and product development of aging, including the influence of certain ingredients on gene expression.
Take a look at the 1-year chart of Nu Skin (NYSE: NUS) with the added notations:
1-year chart of Nu Skin (NYSE: NUS)
NUS peaked back in January at almost $140 and proceeded to lose over 70 percent of its value from there. The stock seems to have bottomed out a bit over the last 2 months, and over that period of time the stock has commonly hit a very important level of resistance at $50 (blue). If the stock can break above $50 higher prices should follow.

The Tale of the Tape: NUS has a key level of resistance at $50. A long trade could be entered on a break through that level. However, if you are bearish on the stock, a short trade could be made on any rallies up to $50.
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Has Cotton Created A Head & Shoulders Bottom?

Cotton Futures--- Cotton futures in the December contract are trading above their 20 but still below their 100 day moving average trading in a 3 month channel settling last Friday in New York at 63.00 currently trading at 64.80 up about 80 points for the trading week with a possible head and shoulders bottom starting to be created on the daily chart. There is major support in the December cotton at 61 and major resistance at 66 with large world supplies keeping a lid on prices also due to the fact of a strong U.S dollar as harvest activity will start to improve over the next several days in the southern part of the United States bringing in a near record crop as I’m still sitting on the sidelines in this market because the trend currently is mixed.

Cotton prices have dropped over 2000 points from the summer highs and has now been consolidating for the last 3 months so continue to look for a breakout above 66 on the upside & below 61 on the downside but at the current time look at another market with a stronger trend as choppy markets are difficult to trade in my opinion. TREND: MIXED –CHART STRUCTURE: EXCELLENT (more)

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NatGas Trading Range Breaks Down Amid Bearish Start To Heating Season

Natural gas inventories rose by 94 bcf last below, at the low end of expectations.

Natural gas was last trading flat at $3.65/mmbtu after the Energy Information Administration reported that operators injected 94 billion cubic feet into storage last week, at the low end of analyst expectations.

The latest injection was above last year’s build of 87 bcf and above the five-year average build of 74 bcf.

In turn, inventories now stand at 3,394 bcf, which is 348 bcf below the year-ago level and 332 bcf below the five-year average (calculated using a slightly different methodology than the EIA).  (more)
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Bond Funds Stock up on Treasuries in Prep for Market Shock

by Tim McLaughlin

(Reuters) – U.S. corporate bond funds this year are adding Treasuries to their holdings at more than twice the rate of corporate debt amid concern that the struggling European economy and potential changes in Federal Reserve policy will drag down profits at U.S. corporations.
Through September, corporate bond portfolios boosted their holdings of U.S. government debt by 15 percent, compared with a 6.5 percent increase in corporate bonds during the same period, according to Lipper Inc data. The funds now hold about $13 billion in Treasuries, 15 percent more than the $11.3 billion they held at the end of 2013.
Corporate bond funds typically invest in a range of debt that includes mortgage-backed securities, U.S. Treasuries and bonds backed by student loans, credit cards and auto loans.
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