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What Is the Strategic Petroleum Reserve? 8 Things to Know as Biden Releases 50M Barrels.

In recent weeks, a cloud has cast a shadow over oil markets as prices have soared across an industry landscape marked by economic uncertainty. After rising…

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This article was originally published by Investor Place

In recent weeks, a cloud has cast a shadow over oil markets as prices have soared across an industry landscape marked by economic uncertainty. After rising earlier in the season, oil prices fell a few days ago amid rising Covid-19 concerns overseas. However, yesterday brought news that has the financial community on its toes, as President Joe Biden announced that the U.S. would be tapping into its Strategic Petroleum Reserve in an effort to curb the rising gas prices that have stemmed from the recent inflationary trends.

Source: Shutterstock

So what do investors need to know about the Strategic Petroleum Reserve? And what might this action mean for the broader markets? Let’s take a look.

As the statement released by the White House summarizes,

“Today, the President is announcing that the Department of Energy will make available releases of 50 million barrels of oil from the Strategic Petroleum Reserve to lower prices for Americans and address the mismatch between demand exiting the pandemic and supply.”

With this type of news dominating coverage, both oil prices and the stocks of oil mining companies are going to be heavily watched today. As of this writing, oil stocks are primarily in the green, with shares of companies such as ConocoPhillips (NYSE:COP), Exxon Mobil (NYSE:XOM) and Chevron Corporation (NYSE:CVX) all rising within the first hour of trading.

Let’s discuss the events of the day in more detail and find out what investors should be watching for.

What Should Investors Know About the Strategic Petroleum Reserve?

  • What is the Strategic Petroleum Reserve? According to the U.S. Department of Energy, it is “a U.S. Government complex of four sites with deep underground storage caverns created in salt domes along the Texas and Louisiana Gulf Coasts.”
  • As of Nov. 19, the Strategic Petroleum Reserve’s holdings across four sites amounted to approximately 604.5 million barrels.
  • This move is a calculated effort that involves several other nations, including China, Japan and India, as well as the United Kingdom and the Republic of Korea.
  • The release of 50 million oil barrels will take place in two ways. First, 32 million barrels will be released over several coming months, which should provide relief to Americans by lowering oil and gas prices in the short term. Second, the remaining 18 barrels will be sold in acceleration as part of a sale previously authorized by Congress.
  • This news comes at a time when energy prices are surging to record numbers. Indeed, West Texas intermediate crude futures recently exceeded their seven-year-high price as they passed $85. Additionally, the national average for a gallon of gas has followed a similarly high trajectory. It rose from $2.11 to $$3.409 over the course of this year.
  • John Kilduff of Again Capital has praised the timing of the Biden administration’s decision. As he states, it should “help to bridge the production shortfall ahead of winter.” This is particularly true if the U.S. receives confirmation of meaningful supply from the large Asian nations also taking part.
  • Following the announcement, oil pries dipped to a per-barrel price of $75.30, a decrease of just under 2%.
  • The White House statement also conveyed that President Biden is prepared to take further action if it is deemed necessary. Additionally, the president intends to coordinate with the rest of the world to “maintain adequate supply” as we move forward toward a post-pandemic world.
  • The Bottom Line

    The implications of the decision could be either positive or negative. However, so far, they seem to be leaning in a positive direction. Whenever significant policy decisions are signed into effect, there is always a fundamental uncertain factor. This often causes investors to proceed with caution.

    However, in this case, it seems these actions from governments across the globe have been priced into oil markets. Therefore, investors should have less cause to worry.

    On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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    The post What Is the Strategic Petroleum Reserve? 8 Things to Know as Biden Releases 50M Barrels. appeared first on InvestorPlace.





    Author: Samuel O'Brient

    Precious Metals

    These 29 Analysts See Silver Going Up Dramatically This Decade

    More and more analysts are forecasting a significant increase in the price of silver over the balance of the decade and below are their projections.
    The…

    More and more analysts are forecasting a significant increase in the price of silver over the balance of the decade and below are their projections.

    An original article by Lorimer Wilson, Managing Editor of munKNEE.com – Your KEY To Making Money!

    1. Goldrunner: $800 to $1,200 by 2025; $5,300 by 2030/32

    “My fractal analysis chart work on Silver points to a potential price for Silver of something like $800 to $1,200 a bit later than 2025 and $5,300 by the end of this decade or early in the next based on Gold reaching Jim Sinclair’s forecast of $80,500 and using a 1 to 16 ratio of Silver to Gold.” (personal email)

    2. Keith Neumeyer: $300 to $1,000

    “Silver is an extremely critical metal – a strategic metal – and the investment community will figure it out eventually” and, when they do, he believes the white metal could reach the $130 level and, if gold were to hit $10,000, he could see silver at $1,000. Source

    3. Hubert Moolman: +$675

    “The 70s pattern is very similar to the pattern that currently exists. Therefore, I do not think it is wishful thinking that silver will reach the target of $675 as a minimum.” Continue reading…

    4. Egon von Greyerz: $600 to $1,000

    “If we assume $10,000 for gold and a gold:silver ratio decline to the historical average of 15, we would see a silver price of $666…If we look at silver adjusted for real inflation based on ShadowStatistics, the $50 high in 1980 would equal to $950 today so silver at between $600 and $1,000 is not an unrealistic targetContinue reading…

    5. Satori Traders: $50 by 2023; $1,350 by 2028

    “My long-term forecast for Silver is $600 per ounce.” Source

    6. Gary Christenson: $100 to $500 in 5-7 years; +$500 by 2030

    “Silver prices for the next decade are dependent upon many unknowns but a ‘more of the same’ financial world suggests silver prices will rise toward $100 in the next 5 – 7 years. A more aggressive chart interpretation shows prices for silver rallying toward $200 – $300. Indeed, if the powers-that-be create or can’t stop hyper-inflation of the dollar, $500 silver will look inexpensive by the end of the decade.”   Continue reading…

    7. Peter Krauth: $300+

    ‘I think silver’s ultimate peak could be $300, and I won’t rule out possibly even higher.” Source

    8. David Smith: $166 to $250

    “[If my forecast of $10,000 gold is realized, as I think it will then] you could see $166 silver, and if…[the gold:silver ratio] drops down to 40:1, which is not out of the question, [you could easily see] $250 silver.” Source

    9. Mike Maloney: $100 to $200 in 5 years

    “Investment demand for silver bullion has risen sharply and, with the silver market being so tiny, it doesn’t take much investment to have an out-sized impact on its price. Silver is dramatically undervalued and represents a very compelling investment opportunity. My prediction for silver 5 years out is $100-$200.” Source 

    10. Jason Hamlin: $169 by end of 2025

    “The silver bull has awakened and when silver finally breaks out, the move tends to be very explosive! I think we could see silver climb to $169…by the end of 2025.″ Source 

    11. Nick Giambruno: +160 

    “Once the dollar starts to lose its value in earnest…people will panic into precious metals just like they did in the ’70s and ’80s, and much of that money will make its way into the tiny silver market (roughly 1/10th the size of the gold market). This will cause the price to spike above $160. It’s a predictable pattern. Bottom line, the stars are aligned for a silver price spike for the record books and now is the perfect time to get in.” Continue reading…

    12. Chris Vermeulen: $90 to $550

    “We believe silver will soon…move up to well above $85 per troy ounce. Ultimately, we estimate it will likely top somewhere between $90 and $550.” Continue reading…

    13. CoinPriceForecast.com: $84.81 by end of 2020; $100.12 by the end of 2032

    “Silver price will hit $30 by the end of 2021 and then $40 by the end of 2023. Silver will rise to $50 within the year of 2024, $60 in 2026, $70 in 2027,   $75 in 2028, $80 in 2029, $90 in 2031 and $100 in 2032.” Source

    14. Jeff Clark: $30 in 2021 to +$100 in 5 years

    “My most confident prediction is that over the next five years, the silver price is going to increase a minimum of $100.” Source

    15. Metals Focus: +$100

    “See silver prices pushing “well above” $30 an ounce.

    16. Paul Mladjenovic: +$100

    “Triple-digit silver—$100 or more—is a possibility in the near future.” Source

    17. David Morgan: $100

    “Assuming a $4,000 gold price target in two to three years’ time, which is roughly a 100% increase from current levels, and assuming a normalization of the gold-silver ratio to 40-1, then silver should be trading at $100 by the time gold doubles in value.” Source

    18. Gov Capital: $70 to $95 in 5 years

    “Based on our custom algorithm we predict that silver will range between $70 and $95 in 5 years time.” Source

    19. Mark O’Byrne: $50 to $100

    “It is important investors focus on gold and silver’s value as hedging and safe haven assets rather than their nominal price highs in dollars.” That being said he believes silver could rise to between $50 and $100. Source

    20. Dumb Money: $62

    “History does serve as a guide for what’s normal and, based on the simple historical average, the price of silver should be about $62.” Source

    21. Andrew Hecht: +$50

    “Silver’s consolidation period and tightening price ranges could be the prelude to a new record high above the 1980 $50.36 peak in the COMEX futures market.” Source

    22. CPM Group: +$50

    “We fully expect silver to hit a new all-time high above $50.”

    23. Lorimer Wilson: $40 to $60 by 2025

    Every time the gold:silver ratio has reached at least 82:1, it has led to major rallies in the silver market. For example, in mid-2003 the gold:silver ratio peaked at 82:1 and over the next 5 years, silver went up 320%; at the end of 2008 the gold:silver ratio again peaked above 82:1 and, over the next 2 years, silver went up 453%. In early 2020 the gold:silver ratio again topped 82:1 and silver has already gone up by 124% since then so, based on history, silver could easily advance to somewhere between $40 and $60 per troy ounce.

    24. Eric Fry: +$50

    “When this ballgame ends…silver will be topping $35 and an extra-inning affair would not surprise me, lifting…the silver price to a new all-time high above $50.” Source

    25. Bank of America: $35 in 2021; $50 in medium term

    “$35 silver is feasible next year, but…could rally to $50 in the medium-term.” Source

    26. Tom Fitzpatrick: $50

    “A move back once more towards the $50 area is a very realistic target for Silver – and not necessarily something that will take years to materialize.” Source

    27. Jim Willie: $50

    “A quick march to the $35 mark, then to $50 in….a few months, not a couple of years.” Source

    28. Don Durrett: $50

    “Once we get over $30, we will run to $35 for one final pause. Then it will be off and running to $50 and an ATH. Get ready. It’s coming.” Source

    29. Lawrence Williams: +$35

    “While I still think $50 silver is perhaps just about out of sight, the metal can certainly move up to perhaps $35 or more given the current momentum.” Source

     

     

    The post These 29 Analysts See Silver Going Up Dramatically This Decade appeared first on munKNEE.com.





    Author: Lorimer Wilson

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    Economics

    The Good, The Bad, & The Ugly

    The Good, The Bad, & The Ugly

    Authored by Sven Henrich via NorthmanTrader.com,

    “Sometimes I wonder if the world is being run by smart…

    The Good, The Bad, & The Ugly

    Authored by Sven Henrich via NorthmanTrader.com,

    “Sometimes I wonder if the world is being run by smart people who are putting us on or by imbeciles who really mean it”

    – Laurence Peter

    After months and months of sticking to a transitory narrative despite ever rising inflation data Jay Powell finally caved yesterday and retired the word transitory. What a colossal embarrassing blunder. Once again a Fed Chair being in total denial about reality. Like Ben Bernanke in 2007 declaring subprime contained and not a threat to the economy, persistent inflation is suddenly a risk to the economy when it supposedly wasn’t all year long while the data clearly kept saying that it was.

    The Fed not only got inflation wrong but by extension they got policy completely wrong and I find myself very much validated here: They’ve totally overdone it on the liquidity front as they kept printing like mad men into an inflationary environment that they denied existed. And it’s not only the Fed. Combined with the ECB both central banks have added a combined $3 trillion in liquidity just in 2021 into an inflationary environment no less. Mad. Which means they exacerbated a massive asset bubble exacerbating wealth inequality when the right policy should have been to taper sooner. And now they may be forced to slam the foot on the breaks, a point I made on CNBC today:

    What’s this all mean for markets in the here and now? Since I promised some charts let me give you the good, the bad, and the ugly.

    Let’s start with the good:

    Let’s recap key technical developments as the context of the market action in oh so important. In late October I highlighted the case for “Make Bears Cry” the infamous broken trend and then new highs to retest the broken trend which was first identified in late September. Bears did indeed cry as everything broke out to new highs including aggressive rallies in small caps, the $NYSE, $DJIA and $SPX and $NDX of course.

    On November 16th in the NorthCast I outlined an inverse pattern on $SPX with the technical target of 4740. This target not only got hit rather precisely but it served as a key reversal pivot again off of the trend line we’ve been watching all year long:

    Note how stubborn and persistently $SPX keep tagging the trend line from the underside with the final highs coming on a very pronounced negative divergence.

    As the sell off ensued I highlighted in MarketWatch the September highs, i.e. the 4550 zone, as a key price zone bulls must hold to continue to be constructive for year end. This level was almost reached yesterday and has so far held as support. But watch this price zone closely in the days and weeks ahead, for should bulls lose this zone things may get a lot uglier still.

    Note the same applies to $NDX:

    Whereas $SPX has broken its trend in September, the $NDX trend remains intact and the index has remained incredibly resilient. As long as the trend remains intact tech is in a good position to set up for a year end rally. $NDX also remains above the September highs and as long as these previous highs hold as support the price action can be constructive as a back test. Note also how precise the trend has remained both on the resistance as well as the support side in the past year:

    Now to the bad:

    Note in the chart above the $VXN, the underlying volatility index, has broken out and in the lead up to the November highs it kept warning with rising volatility prices, that’s the same event we saw leading up to the February 2020 top.

    We can observe a similar even more pronounced breakout in $VIX a pattern that held its uptrend throughout 2021 which I again highlighted in “Make Bears Cry”:

    While bulls can hope to compress the $VIX again for a backtest into late December the genie looks very much to be out of the bottle.

    Another big issue is that ever more highs in $NDX this year have come on an ever weakening cumulative advance/decline picture and in recent days in particular that indicator has completely fallen off the cliff:

    This again speaks to the narrowing of leadership of a few stocks that are holding up the index. Note the advance/decline was falling off the cliff even as $NDX made new all time highs on November 22. Indeed the intermittent peak was in early November way before Omicron was even identified. To highlight the extent of the damage beneath: The average Nasdaq component has experienced a 41% drawdown in 2021, 19% on the $SPX. So while we all get the impression of a massive bull market the underlying picture is not so pretty. The everything rally which sees many stocks getting hammered.

    Which brings me to the ugly.

    In the lead up to the November 22 highs on $SPX and $NDX many other indices did not follow suit as tech was leading driven by a few stocks. This is precisely the same development we saw in January 2020 going into February 2020.

    Indeed, the September high backtest support I mentioned in $NDX has already broken in many indices, such as the $DJIA the broader $NYSE and also small caps which just got pounded dropping 12% in just 3 weeks one of the most aggressive drops from all time highs in history:

    Indeed 2 out of the 3 previous similar sizable sell offs of this magnitude from all time highs came in March 2020 and in August 2007 just as the asset bubbles began to crack.

    The key issue: Trapped supply above as many traders chased the breakout and are now finding themselves under water. Note $IWM is back at February levels.

    And this same trapped supply issue with failed breakouts can be observed in the $DJIA and the broader $NYSE:

    What all of these charts highlight is that there has been tremendous corrective damage inflicted in individual stocks far beyond what the main indices indicate.

    And unless everybody owns only $SPX and $NDX index funds and only the winning stocks it appears people have gotten hammered hard somewhere in individual stock holdings. A question arises. If everybody has piled into stocks like never before:

    Why are so many unhappy?

    Consumer sentiment per University of Michigan shows levels commensurate with the March 2020 crash lows. Both can’t be true. So there’s something big time amiss here. And unless all the inflows are in the winning stocks only there is pain out there that is masked by the indices.

    Unhappy consumers are not happy voters and this has to be a concern for Democrats going into mid term elections next year.

    And it is consumers that have been hit the hardest by rising inflation exacerbated by the Fed’s reckless printing:

    None of this does not preclude a Santa rally from oversold conditions still, but as we saw in early 2020, massive divergences in index performances leading up to new highs are a major warning sign, and the underlying volatility components in all of these charts, including the $VIX, show breakouts suggesting the genie is out of the bottle and will make for a much more volatile 2022.

    Indeed I could even point to similar monthly candle in November as we saw in January 2020:

    Back then the initial news of a new virus was very much ignored and $SPX and $NDX went onto new highs while financials and small caps did not. Sound familiar?

    I’m not making a crash call here, but it may serve to remind the the S&P 500, despite the recent pullback, remains above its quarterly Bollinger band and remains far disconnected from even a basic quarterly 5 EMA reconnect:

    Periods of excessive printing have seen such disconnects before, but the reconnect is coming, either this quarter or likely during the next quarter.

    While in all of history this Bollinger band was resistance, the liquidity excess of 2020 and 2021 has turned this Bollinger band into support. How long this historical aberration continues very much depends on artificial liquidity injections continuing. The short term good news for bulls may be also this historical fact: Since 20009 all major corrections did not manifest themselves until QE programs were ended and corrections were ended with more liquidity coming in. In this sense it may be argued that the first larger correction will not come until the Fed actually ends QE.

    But then we’ve never seen such a price and valuation disconnect from the underlying economy in history while we see the Fed’s credibility suddenly very much shaken. After all it’s all about confidence.

    *  *  *

    For the latest public analysis please visit NorthmanTrader and the NorthCast. To subscribe to our directional market analysis please visit Services.

    Tyler Durden
    Wed, 12/01/2021 – 17:01








    Author: Tyler Durden

    Continue Reading

    Economics

    US Close: December rally faded already, Mixed US data, US gets first Omicron case

    US stocks were off to a good start in December as traders became both optimistic that Omicron would not lead to a more severe illness than the Delta variant…

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    US stocks were off to a good start in December as traders became both optimistic that Omicron would not lead to a more severe illness than the Delta variant and viewed Powell’s hawkish twist as more of a shift to the center. Equities pared gains after South Africa COVID cases nearly doubled since Tuesday and after their infectious disease official Richard Lessells noted it is too early to say Omicron only causes mild cases. The next couple of weeks will likely see risk appetite take a cue from incremental Omicron updates, supply chain issues, and every inflation reading. A second day of Powell at Capitol Hill saw him stick to his faster taper talk and uncertainty over when will inflation come down.

    Stocks gave up most of their gains after the US confirmed its first case of the Omicron variant. We’ve seen this movie before and Wall Street will likely remain COVID variant headline driven until a clear assessment over this wave can be made.

    US Data

    The ADP private payroll report showed 534,000 jobs were created in November, a beat of the 525,000 estimate, but lower than the 570,000 prior reading.  Leisure and hospitality jobs were over 30% of the positions added to the service sector, but that rebound could be in jeopardy if Omicron continues to increase. 

    The ISM manufacturing report was somewhat positive, but nothing to brag about as the headline index rose marginally from 60.8 to 61.1 and as both new orders and employment posted modest increases. Supply chain issues appear to be improving, but orders are still below their recent highs. 

    Author: Ed Moya

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