REX American Resources (REX)

[catkin]

Yes, its a mugs game to try to predict. However, here is an up to date view you might find compelling re oil. ( which I share, as you know):
From IV BRY Board: By Nawaralsaadi
STEO positive update

....The EIA has released a quite bullish short term outlook:

Non-OPEC supply estimates for 2015 were reduced by 30% to 700K barrels from 1m barrels estimated last month, and 2016K supply growth was reduced from 500K barrels to 400k barrels.

Non-OPEC Petroleum and Other Liquids Supply. EIA estimates that non-OPEC production grew by 2.2 million bbl/d in 2014. EIA expects non-OPEC production to grow by 0.7 million bbl/d in 2015 and by 0.4 million bbl/d in 2016, in part because of lower projected oil prices. The slower growth in total non-OPEC supply is largely attributable to slower production growth in the United States and Canada and declining production in Europe and Eurasia. After remaining relatively flat in 2015, production in Eurasia is projected to decline by more than 0.1 million bbl/d in 2016. The projected decline reflects reduced investment in Russia’s oil sector stemming from low oil prices and international sanctions.

Global demand estimates were left unchanged for 2015 at 1m barrels, but increased by 10% for 2016 to 1.1m barrels:

Global Petroleum and Other Liquids Consumption. EIA estimates that global consumption grew by 0.9 million bbl/d in 2014, averaging 92.0 million bbl/d for the year. EIA expects global consumption will grow by 1.0 million bbl/d in 2015 and by 1.1 million bbl/d in 2016. Projected global oil-consumption-weighted real gross domestic product (GDP), which increased by an estimated 2.7% in 2014, is projected to grow by 2.6% in 2015 and by 3.1% in 2016.

I believe the EIA will revise its 2015 demand estimates higher in the next few months as increased global demand data is increasingly undermining that 1m growth in demand estimate.

The large cut in supply estimates for 2015/2016 and the increase in demand estimates for 2016 has forced the EIA to reduce its global inventory expectation for 2015 from 2.9B to 2.88B barrels and to reduce 2016 inventory expectations from 2.92B to 2.87B barrels. This is quite meaningful since instead of a growth in inventories in 2016 the EIA is expecting draw-down as of now. These numbers do not include the potential impact of increased supplied from Iran in 2016.

Over the next 7 quarters the EIA expects world consumption growth to outpace non-OPEC production growth:




If it was not for OPEC maintaining production, the world be experiencing a significant supply deficit by Q4/2015.This is a strong confirmation that current oil prices are not sufficiently high for global supply to meet global demand without the contribution of low cost (and politically unstable) supplies from OPEC.


The latest estimate from the EIA and their impact on global petroleum inventories (a key price predictor) are eerily similar to what took place in 2009 with inventories expected to peak in Q3 and decline in Q4, the only difference is the magnitude with OECD inventories peaking at 2.77B in Q3/2009 compared to an estimated peak of 2.9B in Q3/2015 or 4.6% more. However once we factor in the difference in demand between 2009 and 2015 (84.88m compared to 93.87m) we notice that inventories in 2015 are actually lower at 30 days in forward demand in 2015 vs. 32 days in forward demand in 2009.

If it was not for Iran potentially increasingly supplies in 2016, this report would have confirmed a complete recovery in oil prices to the new marginal cost of global supply of $75 to $85 by 2H-2016. Iran notwithstanding, the oil market fundamentals are the healthiest I have seen them since this collapse has started, and future disruptions in supplies (economic or geopolitical) will have a material impact on global inventories and thus prices, and likewise for any major changes in demand due to low prices or better economic growth, such changes will also have a material impact on prices.

The worst is likely over for the oil market, and the WTI is right on queue with my projected move to $55+ in Q2 and thus the bottom for energy stocks is likely behind us.

Regards,

Nawar



Sources:



April 2015 STEO: http://www.eia.gov/forecasts/steo/pdf/steo_full.pdf

March 2010 STEO: http://www.eia.gov/forecasts/steo/archives/mar10.pdf