This is the weekly Energy Sector financial summary.

The Weekly Energy Report attempt to see the big trends in the energy sectors1.

At the moment, the report is build around 116 companies. You can see their tickers, names, sectors and sub-sectors at the end of the report. Also, the focus is really on North-American Oil & Gas companies. We will address this shortcoming soon by adding more European and Asian energy companies to the mix as well as diversifying the industries to include uranium, electricity generations, renewable energies and industrials2.

We would love to hear from you. Are there typos, mistakes? Are graphs unclear? not useful? Should we add additional resources and analysis? Write us a mail

What made the news ?

  • Brent went from a high of $80.5 to $76.5… Still a very nice price for all the oil producers.
  • The party in the Oil & Gas energy stocks was put on a halt at the end of the week when the OPEC big bwana, Saudi Arabia through its energy minister and its Russian counterpart met in St. Petersburg and decided it was maybe time to pump and bring on the market some more oil. THE EIA announcing an increase in stocks on Wednesday did not help.
    • I am finding this alliance between KSA and Russia rather beffudling. On one side, Russia is parterning with Iran in Syria. On the Other side, this is the second time in a month that the energy minister of both countries are meeting and talking oil output. I am wondering how long can Russia stay so slick.
  • OPEC Meeting on the 22 June in Vienna where they’ll discuss increase in oil production. I know quite a few have been amazed on how OPEC has managed to mainly stick to their quota for the last couple of years. We’ve been so used with OPEC that there is always a few members not respecting their deal.
  • We got a note from the FED Mai minute meeting: if the price of oil continue to climb then there might be another increase in interest rate. Glad the FED guys are not sleeping on their desk and realize that higher energy price will lead to higher inflation… duh!
  • The increase in price has many reasons. To go over a few:
    • reduction in output from a few places such as Venezuela
    • tension in the Middle-East (when is that not a news?). More specifically, we have Saudi Arabia and Iran not going on to well together lately. Uncle Donald adding fire to the situation by going back on the deal the US made with a few other countries (Russia, Germany, France) to get back Iran on the international scene
    • As the US renegate the Iranian deal, it might hurt more small European Cies doing business there as there will be liable to US sanctions. China, India will keep buying their oil there as they have done in the past.
  • Saudi has been a reliable indicator. They said they wanted oil at $80, they now get it… so they are willing to produce more as they don’t want demand to crumble because of too high of a price. Saudi, Russia will do everything they can to keep price at that level (understand $60-$80) as they need the money for their own national budget (think Saudi 2030 Vision).
  • As long as electric cars are a luxury good, increase in oil price will do little to switch consumers to that market.
  • In the NIMBY section, we have the Canadian saga about the Trans Mountain pipeline. Kinder Morgan (KMI) being in between the legal battle of British Columbia and Alberta. It is nice to have oil but if you can’t move it … it sucks!
  • More news on Uranium and possible end to the bear market there.
    • At the AtomExpo conference held this past week in Moscow, World Nuclear Association Director Genera Agneta Rising highlighted the fact that “In the five years from 2015 to 2019 we should see 55 new reactors start in 12 countries, two of those countries hosting their first nuclear power plant.” Projected uranium “base demand” totals 382 million pounds U3O8 for 2018 and 2019.
    • On the supply side, this year’s projected mine supply is 141 million pounds U3O8.
    • The Russian Duma passed “an amended version of a bill authorizing the president to impose sanctions in response to economic restrictions adopted by the United States and its allies.” The Russian could stop any export of U3O8 to the US allies (aka Europe? Japan?)
    • The latest U.S. Energy Information Association (EIA) report shows U.S. Uranium production in the first quarter of 2018 at 226,780 lbs., close to a 70 year low. This amount of U.S. production is less than what is required for one reactor. The low production highlights the overdependence of the utility industry on foreign uranium. The threat of sanctions from Russia further highlights the national security risks the U.S. faces with overdependency on uranium imports.

Report higlights.

  • Last week report had so many stocks above their 50 SMA, it was just a matter of time to have a reversion to more normal level. And this is what happened on Thursday and Friday.
  • At the same time, we had a few individual stocks who were so high above their 50 SMA (comparing to their average distance from their 50 SMA), that it was also just a question of time (days) for these stocks to go back to their more normal level. Chesapeake Energy Corporation (CHK) was such a stock. It still climbed up early in the week, but got a severe reversal on Thursday and Friday.
  • On the Energy Overview, we notice that all form of energy stumbled including uranium and coal. Gaz is the only one that managed to keep its cool.
  • Most energies ETF have delivered alpha vs the S&P500 over the last 3 months and 12 months. Uranium and the MLP’s being exception. The coal party - after Trump election - seems to see its end.
  • If we dig in the O&G, XOP and CHIE hae been the best performers. Canadians energy stocks still struggles to keep up. The Canadian exchanges are still suffering from the commodities bear market. There are signs we are getting out of it though.
  • For seven weeks in a row, we got the positive weekly returns for over 50% of the O&G stocks: the median line being positive.

General Energy overview

List of ETF selected for the general overview.

Selected Energy related ETF
ticker Name
VDE Vanguard Energy ETF
IXC iShares Global Energy ETF
KOL VanEck Vectors Coal ETF
URA Global X Uranium ETF
UNG United States Natural Gas Fund LP
MLPX Global X MLP & Energy Infrastructure ETF
USO United States Oil Fund LP
SPY SPDR S&P500

Returns of the energy ETF over the last 3 months

Returns of the energy ETF over the last 12 months

The Oil & Gas Industry

Following GISC, the Oil & Gas (OG) industry consists of the following sectors and sub-sectors:

List of Sectors and Sub-sectors of the O&G Industry
Sector Subsector
Equipment & Services Drilling
Equipment & Services Equipment & Services Cies
Consumable Fuels Exploration & Production Cies
Consumable Fuels Major Integrated Cies
Consumable Fuels Refining & Marketing Cies
Consumable Fuels Storage & Transportation Cies

At the bottom of this file, there is the complete list of financial instruments with their sectors and sub-sectors on which the following analysis has been based on.

Breadth of the Oil & Gas Market

Usually, on shorter time frame, we use the 50 days Standard Moving Average (SMA) to see if a stock is in an uptrend. The graphs below does exactly that: it checks the percentage of stocks that are trading above their 50 days SMA. This also tell us when the sector might be over-extended to the upside or to the downside.

Weekly and bi-monthly returns

In this section, we check the weekly return for the last 12 weeks for all stocks belonging to the industry, sectors and sub-sectors.

We do the same graph but with a 2 weeks return and a disaggregation by sub-sector.

Now let’s have a recap table to drill in at the company level. This table has been generated with data from 25 May, 2018

The list of financial instruments

Here is the list of all equities used in this report, their sector and subsector.

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  1. The report has been generated with the R language and thanks to the many community members who have contributed their time in building packages.↩

  2. We use the AlphaVantage API to get our data.↩