Throw Your New Year’s Resolutions in the Trash Can!
Forget New Year’s resolutions.
Here at Oil & Energy Daily, the mission never changes…
Explosive profits week in and week out!
I settle for nothing less.
As the calendar flips to 2014, I want to make sure momentum is in our favor.
So I’m looking back to last year’s biggest winners in the commodities markets, and then determining which ones are most likely to follow through.
I’ll also pluck through last year’s garbage.
Natural Gas Gets the Gold Star
Natural gas was the 2013 energy commodities champion – by far!
It beat every other commodity and index – gaining over 10% on the year and maxing out at over 20% at one point.
That trend remains intact for 2014, as well.
Natural gas demand is increasing faster than the demand for any other energy source. In 2014, gas prices should average more than $4 per thousand cubic feet (mcf) for the year.
So any move below $3.50 should be viewed as a buying opportunity.
We’re just a few years away from a tipping point that could permanently send prices over $5 per mcf.
That will happen when we see more adoption in the transportation sector.
Right now, approximately 1% of the U.S. transport system is using natural gas, leaving a lot of room on the upside.
So keep your eye on this prize over the next year, and get in when you can.
My 2014 Crude Oil Forecast
Based on West Texas Intermediate prices, the runner-up in the 2013 energy commodities market was crude oil.
It’s up a few percentage points for the year, which doesn’t sound that impressive. That is, until you consider how much new crude oil flooded the market from U.S. shale plays.
This trend reflects the defiantly stronger economic growth we’re seeing – both in the United States and around the globe.
Barreling into 2014, keep in mind that oil prices are still under the control of OPEC. They’re by far the largest player in the market and have the power to set prices over the long term.
Population-packed countries like China and India are consuming more oil, but overall rates of consumption are falling: The United States is consuming more of its own oil (and producing more, as well). Europe is a non-entity when it comes to consumption, and will remain flat.
New oil will come onto the market from Libya, Iran and Iraq, which will force the Saudis to cut production to keep prices at current levels.
My tip for 2014?
Look for oil to trade in a range between $80 and $110 – with a bias to lower prices based on current consumption and production trends.
A Tipping Point for Gold
The clear loser in the 2013 race to commodity excellence is gold.
The metal suffered the biggest collapse in the commodity space, falling by almost 30%.
A combination of speculative excess and strength in the U.S. dollar – paired with fear of inflation – took center stage in 2013, knocking gold from its throne.
Recall, gold had more than sextupled in the last decade. And while prices are still up by a factor of four from their lows over 10 years ago, the outlook for prices remains negative.
Gold equities absolutely collapsed in 2013, with most stocks losing more than half of their value.
Overall demand is still high, while Asian demand is continuing to increase. And supply is beginning to shrink as high-cost mines are incessantly halting production.
This will ultimately lend support to gold prices… But moving into 2014, gold doesn’t appear to be trading on fundamentals. It’s trading on negative sentiment.
Technicals are pointing to strong support in the $1,180 to $1,200 range. So a sustained break below $1,180 could send prices to $1,000 or lower – while a move above $1,400 would indicate higher prices ahead.
Bottom line: It’ll pay to be a bull in the market this year. Stay tuned as we watch the 2014 energy market boom – and I track down the most compelling (and profitable) opportunities.
And “the chase” continues,