February 2021

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“WHOEVER CONTROLS OIL CONTROLSMUCH MORE THAN OIL”

OUTLOOK ON IMPORTANT ENERGY PRODUCTS

YAY! DEMAND BEGINS BACK TO WORK

Many states now are beginning to start work again; albeit slowly. This automatically will kick start demand. What people do not know is how big the demand will be. Gov inflation helps.

GLOBAL DEMAND PICTURE ECONOMICS

Asia began to operate and the USA is coming back as well. Europe, now with Coronabonds, and lending program,should reignite the global picture. Trade war talk also will help create more demand.

IT’S GOING TO GET HOT! WEATHER

The summer is projected to be hotter than normal. This will create more demand throughout industry and the home. And should help to lower the inventory builds we are seeing.

THREE MONTHS OUT

In theory a significant low occurs anytime a commodity hits $0; especially one as important as crude oil. We still cannot operate a fossil fuel free lifestyle. But with the demand picture, you must consider 3 months out contracts at the least.

Fun Fact: Supply has been decreasing YoY

REFLECTING ECONOMY?


The supply picture for Oil suppy has not been encouraging for many years. This year we most likely will see a plunge in this number. Cheap oil will create a great environment for economic growth.

What we are looking for is low supply and economic stimulus programs that the West have been talking about. Namely, trillion dollar infrastructure programs which will certainly juice up demand for the backbone of the international economy. Inflation never hurt as well.

Crude Oil Futures – Monthly

While the price action has been legendary, the longer-term price channels have been respected. A bottom has been established and $50 should be considered.

Gasoline Futures – Monthly

Gasoline dropped in price but notice it did not go below 2008. It shows demand is very strong yet. And possible bottom before the next inflationary wave.

Natural Gas Futures – Monthly

Storage in natural gas is still very high and the drawdown was less than expected. But with fracking in disarray, there is less production of natural gas which should result in very strong demand

Look at this monthly continuous chart of Natural Gas. We have shown the strong cyclical nature of natural gas which is about 15 months. Every 15 months, natural gas tends to have beginning, a big rally, and a sell-off. From the chart we show dating back to 2006, we suspect a rally to $3.50. If natural gas does take out its low then we may see an extended down move.

Temperature

On a good note for people Energy Demand, the weather is forecast to be Hot this summer in all the areas where people like to live. So economy or no economy the air conditioners better work.

RUSSEL FILNKELSTEIN.

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