CME’s Chief Economist and managing director Blu Putnam recently wrote a report focusing on 8 specific factors that could influence the energy market in 2016 and beyond. The energy markets are what I like to follow, and I think the content of this report is worth reading.
As commodity traders we all know that the Crude markets have been quite a topic of debate and volatility in 2015 from the 2014 sell off. We witnessed a market that sold off 50-60% of value in less than a year, trading from $100 a barrel to lows under $40 a barrel. This has definitely hurt the oil and gas industry and has left traders and producers guessing on where we could be going from here. With many of the oil/gas producers weighed down by debt, there was no let up on production flows as they needed the incoming cash to pay their obligations. We have seen energy related MLP’s (Master Limited Partnerships) get destroyed this year, and the MLPs that have survived had to enact new short term and long term adjustments to fit this “New Normal” of oil and gas prices. The question is, is this increased supply in a time of lower prices adding fuel to the fire? Well that in my opinion is why we haven’t had the quick rebound in crude prices. So where do we go from here? That is the ultimate question we are looking into, and I believe Blu Putnam tries to address this in his report. Crude oil has seemed to find some equilibrium in $45-$50 range and this could be the new fair market value of crude, with the outside exception to geo political events or global demand changes. Where are we going to go in 2016 and beyond?
The report covers 8 factors to consider–4 short-term and 4 long-term. In a nut shell, these topics are as follows:
Short Term:
- Continued Growth of Production in the US
- Increased production from the Middle East – Iran agreement
- Slow Global Growth – China
- An El Nino Impact on 2015-2016 Winter
Long Term:
- LNG Exports from the United States
- Declining North Sea Crude Oil Production
- Delinking of Natural Gas pricing from Crude oil in Europe and Asia
- Potential for U.S. ban on crude oil exports to be lifted
I strongly encourage that you download the short report and read each factor and its supporting information.
If you have any questions regarding the energy markets, do not hesitate to contact me directly here at Daniels Trading. I also have recently launched a newsletter the “Market Dimensions Advisory” where I provide my trading ideas and market opinions in email and video form. It’s free to sign-up, and you can register below.
Subscribe to Market Dimensions Advisory – Free Edition
Market Dimensions Advisory – Free Edition - Market Dimensions Advisory leverages insights gained from working with professional traders, commercial clients and institutional businesses paired with an understanding of market relationships, order flow and trading volume, along with news, trends and seasonal info, to give you a "3D view" of trading.
Market Dimensions Advisory – Free Edition includes an email newsletter subscription.
dt Pro Futures Trading Software Demo
Daniels Trading’s dedication to providing the premier futures trading software in the industry was driven by our relentless pursuit of satisfying the needs of active traders and offering a trading platform that would truly set us apart in the industry. The result is our dt Pro.
Risk Disclosure
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.
