Sometimes my colleagues joke with me because I write exclusively about energy.
They’ll say something like, “Hey, Keith, are you gonna write about oil… again?”
I take their sarcasm in stride because I love energy investing, and writing about it is a great job to have… even though at times it can feel like very little or nothing at all happens to oil and gas.
I’m happy to write about investing in an often-boring industry because the boring industries are where the money is.
Of course, over the last couple of weeks, I didn’t have to worry about a boring energy sector…
On Monday, I watched as West Texas Intermediate crude prices continued their rapid decline. China sent shockwaves through world markets as weak economic data and a battered stock market worried oil traders over demand numbers.
What the mainstream financial press is calling “Black Monday” was only a bad day if you’re a trader. If you’re like me and invest on fundamentals alone, you’ll realize Monday was an astounding buying opportunity.
That became even more apparent yesterday when WTI, the benchmark for U.S. oil prices, shot up 10%, as the news was made public that the U.S. economy is headed for 3.7% annualized growth.
Many companies that saw share prices crushed on Monday enjoyed a swift and robust recovery of sorts:
Even Exxon Mobil (NYSE: XOM) saw its share price climb about $7 from the Black Monday lows, a solid gain for such a big blue-chip company.
That said, I can only call this a “recovery of sorts” because WTI prices are still down about 30% from this year’s high in June. And oil is still down well over 50% since last summer, when prices were in the triple digits per barrel.
So it’s hard to say we’ve had a recovery when the price of oil is still well below what it could be.
Also, because the bullish movement for oil yesterday was brought about by decent economic numbers in America, everyone around the world may not have felt the same flash of hope…
United Kingdom Buyout
While oil prices grew faster in the U.S. yesterday than they had since 2009, other energy hubs around the world were left out of this “recovery.”
The chart below shows WTI oil prices over the last two weeks (the black line) compared to Brent crude’s movement over the same time frame (the green line).
Although the price for Brent crude per barrel is still more than that of WTI, the momentum clearly favors American oil prices. Many hope that higher demand will come with the better economic numbers in the U.S.
That and the U.S. is a bit more isolated in terms of oil since we can only import and not export crude (yet).
Perhaps traders in London watching U.S. crude prices felt a bit envious, but companies across the pond saw it as a buying opportunity.
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North Sea Midstream Partners yesterday announced a near $1 billion purchase of midstream assets from Total SA (NYSE: TOT).
The company acquired the Frigg UK gas pipeline and the St. Fergus Gas Terminal outright, as well as a 67% operated interest in the Shetland Island Regional Gas Export System from the French energy giant for $905 million.
Although the North Sea’s decline is undeniable, lower commodity prices made the purchase a worthwhile one for North Sea Midstream because the massive oil and gas formation still provides the United Kingdom and Norway with plenty of energy.
Plus, it’s always intelligent as a company (or an investor, for that matter) to buy when prices are low, and surely North Sea Midstream got a better deal with the global commodities markets in flux.
This buyout should serve as a signal to investors that oil and gas in the United Kingdom is about to heat up in a big way.
What’s more, it’s going to happen in a way very few expect…
United Kingdom Shale Bounty
The assets North Sea Midstream bought from Total are strictly North Sea properties, but it’s what’s on the mainland of the United Kingdom that should be exciting for investors.
Over the last few years, many commentators have waited for the UK to start its own version of the shale boom that’s happened in the U.S.
England, Scotland, and Wales all have significant shale oil and gas reserves that could serve as a boon to the economies of those countries and help stave off the specter of Russia.
You see, the Russians, under Vladimir Putin’s leadership, have been a source of anxiety for the British, as Putin’s rebels continue their campaign in Ukraine and the former KGB officer threatens gas supplies.
However, when the UK takes advantage of its shale resources (as it is about to do), Russia’s influence over the European Union will diminish hastily.
It’s just a matter of time before the early drillers in the UK start producing, selling, and providing resources for the rest of Europe.
Come next Tuesday, my much-touted report on this phenomenon in the United Kingdom will be sent to your inbox. At that time, I’ll urge you to discover the great investment opportunities inside so you can take advantage of Europe’s coming shale oil and gas boom.
Until next time,
Keith Kohl
Check us out on YouTube!A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.
Keith’s keen trading acumen and investment research also extend all the way into the complex biotech sector, where he and his readers take advantage of the newest and most groundbreaking medical therapies being developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s to lab scientists grinding out the latest medical technology and treatments. You can join his vast investment community and target the most profitable biotech stocks in Keith’s Topline Trader advisory newsletter.
