| You are receiving this email because you signed up to receive our free e-letter, or you purchased a product or service from its publisher, The Oxford Club. If you are having trouble viewing this email, click here to view it in your browser. |
| Brought to you by The Oxford Club | Saturday, July 30, 2016 |
BANNED IN AMERICA: The World's Safest Investment
Have you heard about the strange bans cropping up from California to New York? Government offices, churches, even restaurants are getting on board. The target isn't smoking, drinking or guns. We're talking about outlawing the world's safest investment... right here in the U.S.A.! But why would anyone want to do that? And why do all serious people need to understand what's happening, in time to prepare? This special presentation reveals everything you need to know.
Please click here now. And prepare to be shocked... |
|
The Long-Term Case for Natural Gas
 Last week, two giants in oil field services officially declared the bottom in crude.
During their earnings calls, both Schlumberger (NYSE: SLB) and Halliburton (NYSE: HAL) remarked that the worst was over for the U.S. oil industry. West Texas Intermediate bottomed out, and crude will see modest gains going forward.
Of course, we called the bottom here back in February.
But, following two years of evisceration, rig counts are starting to see a turnaround... Since hitting a low point in late May, the total North American rig count is up 14.35%, from 404 to 462.
Despite the renewed gain, the total number of working rigs in North America is less than half of what it was during the financial crisis. That's because so many rigs were looking for natural gas then.
In August and September 2008, the number of natural gas rigs topped out at 1,606. Today, it's a mere 88. That's a decline of 94.5%.
A lot of our newfound momentum is because of crude.
I've written in the past about rig balance and how you can use it in energy investing. For instance, when the North American rig count gets lopsided - more rigs drilling for oil versus natural gas or vice versa - it usually means a price collapse is on the horizon.
The reason is simple: If 75% of rigs are drilling for one resource and 25% are drilling for the other, we're headed toward oversupply.
That will ultimately lead to a price correction.
It was this figure that tipped me off before crude's big drop a few years ago. (Admittedly, I was 11 to 12 months early.) The disparity between the percentage of rigs looking for oil and the percentage of rigs looking for natural gas became widely imbalanced, crossing above that 75% threshold... Prior to that, the percentage of rigs looking for natural gas versus oil was shifted the other way.
As a result, natural gas prices collapsed. The ongoing lopsided nature of the drilling sector continues to pique my interest.
In June, we hit the all-time lowest number of rigs drilling for natural gas at 82. As I said above, we're at 88 right now. It's a level we've been hovering around since 2014.
These days, less than 20% of all rigs working in North America are focused on natural gas.
Already this year, the price of natural gas is up 93.3% from the Henry Hub low of $1.49 in March. Since Memorial Day weekend, the price is up 62.7%.
At the same time, natural gas has continued its push to replace coal for power generation.
In 2008, coal accounted for 48.2% of U.S. electricity generation and natural gas made up 21.4%. This year, natural gas accounts for 34.3%, while coal has fallen to 30.2%.
It's this sector that's driving natural gas consumption. In just the last two years, natural gas consumption from electricity has increased by 24.6%.
Again, that's just since 2014.
Why Two Men Bet $3.03 Billion...
Two billionaires recently made huge bets on a single stock.
The first, one of the 20 richest people in the United States, put $1.33 billion down.
The second, a man who literally wrote the book on safety, put in even more... $1.7 billion.
Why are they so confident? In short, because this company is set to do something nobody has ever done in the history of the markets. Here's the full story. |
Total U.S. consumption during that same span rose 4.6%. Meanwhile, total natural gas production grew 6.2%.
The end of summer is still a couple of months off. That's when we'll start getting into the period of the year where natural gas consumption really takes off.
In June, U.S. consumption was up 6.2% year over year, rising to 67.88 billion cubic feet per day. In January and February, consumption typically tops out at more than 100 Bcf/d.
So, much like Schlumberger and Halliburton have officially called the bottom in crude, I believe we've already seen the bottom in natural gas prices this year.
In fact, this will likely be its bottom for quite some time.
Consumption from the electricity generation sector is rising rapidly. Don't expect that to reverse course. At the same time, the number of working natural gas rigs is at historic lows. Ultimately, that's a signal that production will flatline.
The more the supply-demand balance is thrown off, the more prices can start to rise.
We do have massive natural gas inventories, just like we do with crude. But over the long term, I think we'll start seeing natural gas trading in the $3 range once again, on its way to $4.
Good investing,
Matthew Is Your Dividend Stock Safe?
Dividends are the last place to get decent income.
Savings accounts... Treasurys... bonds... They all pay next to nothing.
Dividends are all that's left. But 2016 could be the year of the dividend cut. That's why we've created a tool to help determine if your dividends are safe. Just type in a company name to find out. Details on how you can access our tool here. |
|
|
|
Zinc is up 36% since hitting a low early this year. That kind of move in an industrial metal is stunning. Read On... |
|
|
In February, I told investors that the spike in the gold-oil ratio was a buying opportunity. And it still is. Read On... |
|
|
Gold is up big thanks to Brexit fears and low interest rates. Here are two "no-brainer" buys. Read On... |
|
|
|
The Oxford Club is a financial publisher that does not offer any personal financial advice or advocate the purchase or sale of any security or investment for any specific individual. Members should be aware that although our track record is highly rated by an independent analysis and has been legally reviewed, investment markets have inherent risks and there can be no guarantee of future profits. The stated returns may also include option trades. 
No comments:
Post a Comment
Keep a civil tongue.