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 122 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

To read the last report, go here and to see the second to last one go here

What made the news ?

Oil and Gas

  • Larger than expected decline in US crude oil reserve gave a boost to the price of oil. WTI = $69.7, while Brent = $77.3. Iran sanctions kicking in (although not news in itself) might have help in the price increase as well.

  • Saudi Arabia (KSA) has changed the rules of the games for Aramco. It looses its ‘perpetuity’ oil and gaz right. Now the National Cie has only 40 years of exploitation rights.

  • Also in the KSA, there is now an indefinite postponement of the floating of the 5% of Aramco. Question: how would KSA balance its budget and be able to realize its 2030 vision? KSA needs a price of $70 the barrel (Brent) to balance its budget. KSA will need to stop its waste of oil: its consumes as much oil for its population of 30M that UK and Germany together(147M)

  • Germany went ahead with the construction of the Nord Stream 2 - a pipleline in the Baltic Sea that will bring Russian gaz into Germany (avoiding the usual Ulkrainian transit). This please Russia as it wants to suffocate Ukraine from the money it is making on the transit of gaz inside its borders. Trump is not happy with that as well as some European leaders. Of course, US are not happy as they want to export their gaz to the EU (which would have been a way for EU to equilibrate the US trade deficit balance that Trump is complaining so much about.) US also does not see why Germany is giving business to Russia when they are spending billions for the NATO to protect EU and the Germans from the Russians.

  • US natural gaz was supposed to be exported to China. But with the trade war tensions which keep rising, China may hit the LNG US exports with a 25% tariff as well. Not goot for LNG export Cies such as Cheniere. China wants to reduce its dependency to coal for its electricity generation.

  • Countries are starting to decrease their purchase of Iranian oil. China, India, and EU were the main buyers. Sanctions kick in on November 4th. Buying countries are a lot less happy with Uncle Donald with these sanctions. Russia, KSA and US are all happy to sell to others whatever Iran cannot sell. Inssurer of tanker vessel also find it harder to inssure tankers coming out of Iran. Understandbly, Iran intend to fight back and is threatening to create chaos in the straight of Hormuz if its oil cannot leave.
    ** Not sure what capacity does Iran has to block the straight…. but it will surely create some volatility in the market if they try to do so.
    ** I believe that the overuse of economical sanctions will have a negative effect long term on the US. More countries are now working hard to trade without the USD as a common currency. At the moment, the hegemony of the US is sustained by 2 factors: its army and the USD. Loosing the USD world trade dominance will be the beginning of the end for the US.

Renewable Energies

  • Article on wether to buy an electric car. At the moment, the 2 downside of EV are prices (still much higher than comparable fuel cars) and their range. So far, EV was a niche market for the conviced green mind. The general population has not yet bought into it. The next 12 months, around 20 new pure EV will come on the market. We’ll see if EV can now be adopted by the masses: Nissan Leaf, Hundai Kona, Jaguar I-Pace.
    If the price upfront cost is high, the following costs are very much reduced: fuel, maintenance costs (following a UBS report 16 moving parts in a EV compared to 136 in a combustion car), parking permits

  • 3 Lithium Cies are going to be listed this week (one in NYSE and 2 in Hong-Kong). Some analyst predict a over-supply soon as the largst suppliers in Chile have already made plans to extend their capacity to supply Lithium to auto-manufacturer.

  • Facebook is joining Citygroup and Ikea to achieve a 100% renewable energy goal by 2020. Last year, FB used 2.6 terrawatt / h of electricity.

Uranium

  • Rolls-Royce want to develop its engine maintenance analytics expertise to work for nuclear reactors. The idea is to deploy sensors that will give better hinsights on what and when to maintain and avoid costly down time. It is called predictive maintenance. It already signs some agreement with a Canadian Electricity Cie (Bruce Power).

  • South-Africa will not go the nuclear road. Instead it will increase its gaz, solar and wind installations.

Utilities - Electricity Generations

  • The 4 main UK electricity Cies (EDF, RWE, Scottish Power, SSE) are in the limbo into wether they will be binded by the current EU agreements. Brexit issues.

  • In the UK retail energy business, UK anti-trust authorities have agreed on the merging of SSE and Innogy, a $3.2B power giant. Centrical PLC will not be the biggest one anymore.

  • Colorado will advance the reitrement of some its coal plants by 10 years by installing more wind turbines. Today we can produce electricity from wind at cheaper rate than from gas (even at the low price gaz is today). Colorado genrates 44% of its electricity from coal. This will move to 24%.

Report higlights.

  • Last week big winner are the same as last week: coal and uranium. They are still the best performers over the last 12 months. The energy infrastructure / pipelines (MLPX) is still lagging.

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

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Returns of the energy ETF over the last 12 months

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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.

Recap table

Now let’s have a recap table to drill in at the company level. This table has been generated with data from 31 August, 2018

Uranium

The list of financial instruments

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

If you have enjoyed this report, let us now.

  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.↩