SUNDAY EDITION

November 19th, 2017

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editorials

 
Oil Market Update
Clive Maund  Oct 25  

Will Crude Oil Drop under $50 in Coming Week?
Przemyslaw Radomski  Oct 05  

Sharp Decline in Crude Oil and Its Consequences
Przemyslaw Radomski  Aug 16  

Jericho Oil raises C$5.7M from cornerstone investors
  Aug 13  

Will Crude Oil Extend Gains?
Przemyslaw Radomski  Jul 29  

»» more editorials in the archives

market data


Ux U3O8 Price (Uranium)Nov 13th, 2017
$23.00 +$2.75 www.uxc.com



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expert analysis & newsletter briefs

NexGen Energy Ltd.

"My top pick for 2016 is NexGen Energy Ltd. . . Arrow is an emerging world-class deposit that is still in the early stages of discovery. The state—it being so early in the delineation and development process—means a lot of upside still remains. . .the company just closed a $21M financing, which means the company has enough cash to carry through 2016 and beyond." (12/23/15) - Gwen Preston, Resource Maven

NexGen Energy Ltd.

"My top pick for 2016 is NexGen Energy Ltd. . . Arrow is an emerging world-class deposit that is still in the early stages of discovery. The state—it being so early in the delineation and development process—means a lot of upside still remains. . .the company just closed a $21M financing, which means the company has enough cash to carry through 2016 and beyond." (12/23/15) - Gwen Preston, Resource Maven

Fission Uranium Corp.

"Fission Uranium Corp. announced it entered into a binding letter of intent with China's CGN Mining, a subsidiary of nuclear giant China General Nuclear Power Group, to acquire 19.99% of Fission as part of an CA$82M strategic investment, along with a potential future offtake agreement on production from Patterson Lake South (PLS). . .we urge investors to bolster positions in Fission as the deal derisks development financing, and in the interim, should fund PLS through full feasibility and permitting." (12/22/15) - David Sadowski,

Energy Fuels Inc.

"Energy Fuels Inc. is the only conventional uranium producer in the U.S. and the second-largest producer overall. It has the potential become #1, given the projects and mines it has on standby or that are close to being in development. At full ramp-up we expect the company to be able to produce 5–7 Mlb/year, in a country currently producing 4–5 Mlb/year. The U.S. consumes 55 Mlb/year, but only about 10% is supplied domestically. U.S. utilities seeking security of supply will greatly prefer U.S. producers over those from Kazakhstan, Russia or Africa. This company is well positioned to benefit from higher uranium prices. We have a Buy rating with a target price of $11.85/share." (12/22/15) - The Energy Report Interview with Rob Chang

Fission Uranium Corp.

"Fission Uranium Corp. announced it entered into a binding letter of intent with China's CGN Mining, a subsidiary of nuclear giant China General Nuclear Power Group, to acquire 19.99% of Fission as part of an CA$82M strategic investment, along with a potential future offtake agreement on production from Patterson Lake South (PLS). . .we urge investors to bolster positions in Fission as the deal derisks development financing, and in the interim, should fund PLS through full feasibility and permitting." (12/22/15) - David Sadowski,


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from the publisher
  Robert J. Moriarty

Welcome to 321energy.



Chart In Focus
Oil Spike Eases Big Contango


Tom McClellan, Editor
McClellan Financial Publications, Inc
February 27th, 2011
email: webmaster@mcoscillator.com
website: www.mcoscillator.com


The political unrest in Tunisia, Egypt, and now Libya has caused a big upward spike in oil prices, as especially the European oil markets worry about interruptions of supplies.  The events that caused the oil price spike are not as predictable as the rise itself, which was forecasted by the indicator in this week's chart.

"Contango" is the term used to describe how commodities futures prices for different delivery months have different current prices.  Under a normal contango situation, the prices will be higher for delivery months in the distant future.  Usually it reflects the "time value of money" and thus will be related to the level of short term interest rates.

"Backwardation" refers to the unusual situation in which the near month contracts and the spot price are higher than the prices for the more distant months. 

This week's chart looks at how contango and backwardation in oil futures prices has changed over time.  Oil futures have been continuously in a state of contango (negative indicator) since just before the bottom in early 2009.  When contango gets really extreme, such that spot prices are well below the prices of distant delivery months, then the oil market sees all sorts of strange behaviors, such as a building boom for storage tanks at the Cushing, Oklahoma delivery point, or the rental of oil tankers which are just anchored to wait for the distant contract month to arrive.  All of these activities have costs, but if the contango is big enough then there is enough money in the spread to pay for them. 

As recently as February 9, 2011, we saw the March 2011 contract for light sweet crude priced at $86.99 per barrel, while the February 2012 contract was priced at $99.53.  That is a spread of $12.54.  If you had a place to store that oil, you could have bought it on the spot market for around $87 and sold a February 2012 contract, collecting a guaranteed return of 14.4%.  Imbalances that big do not stick around for very long.

And big imbalances like that are also an indication that a turn in the near month price is very likely.  The very low indicator reading reflecting that big contango appeared just before the big price spike related to middle east unrest.  In the process, the big disparity between near month and far month prices has eased quite a bit, taking this contango indicator up to near the highs of its recent range. 

When we look at a longer term view of this indicator, we can see that the range of values is something that varies over time.  Since 2009, readings above -5 have marked oil price tops and readings below -10 have marked price bottoms.  But at other points in history, one would have needed to apply different thresholds for "high" and "low" readings in this indicator.  



From 2000-2004, this indicator remained mostly above zero, meaning that oil futures contracts were in "backwardation".  During that period, readings down near zero marked good price bottoms while readings above +5 marked price tops.  So if one is going to use this indicator to help with timing oil price moves, then one must be aware that ranges of values vary over time.

If we think with a long term perspective, then the fact that oil futures contracts have been in a persistent state of contango (negative indicator readings) is a sign that we are likely not done with this long upward trend for oil prices, even though we may be done with the Libya-related pop. 

Related Charts
Dec 10, 2010
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After The Rogue Wave
Oct 14, 2010
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Gold Prices Lead The Way For Commodities
Feb 26, 2010
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Oil’s Leading Indication for Stocks

Tom McClellan, Editor
McClellan Financial Publications, Inc
February 27th, 2011
email: webmaster@mcoscillator.com
website: www.mcoscillator.com


Analysis is derived from data believed to be accurate, but such accuracy or completeness cannot be guaranteed. It should not be assumed that such analysis, past or future, will be profitable or will equal past performance or guarantee future performance or trends. All trading and investment decisions are the sole responsibility of the reader. Inclusion of information about managed accounts program positions and other information is not intended as any type of recommendation, nor solicitation. We reserve the right to refuse service to anyone for any reason. The principals of McClellan Financial Publications, Inc. may have open positions in the markets covered.

Copyright © 2011 McClellan Financial Publications All rights reserved.



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November 19th, 2017

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