Friday, October 12, 2012

NATURAL GAS WILL BE KING IN 2013------> By Shan Saeed

I wrote an article for a malaysian magazine in Sept 2012, SMART INVESTOR in which I mentioned about the growing important of Natural Gas. In July NG was trading at $2.5 bttu. Today, the price stand at $3.6 bttu--[ New York Times Oct 12, 2012]. An increase of 44% in just 75 days. Pure increase in wealth preservation in these turbulent times. Natural gas will remain king in 2013. In my humble opinion, Natural Gas prices will touch $4.95 bttu by next year. And while it will continue to be dirt cheap, prices will start inching back up next year. Also worth noting is that going forward, I foresee and definitely we would see more trucks and buses running on natural gas. There will be major approval on exports. The economics on exports are just too juicy to ignore. Those who are properly positioned now in natural gas are going to see some nice, steady growth in 2013.

In USA, Domestic oil production will also remain strong, offering dozens of opportunities for investors. I'm particularly fond of some of the latest enhanced oil recovery technologies, like this one that's now being utilized by BP, Exxon Mobil, Chevron, and Halliburton. North Dakota will continue to pump out oil fortunes as well, and Arctic drilling will aggressively resume next year when the season starts up again.

Although I suspect to see more delays and more proof that the economics of many of these Arctic drilling operations simply don't make sense right now... And I don't even want to think about an oil spill up there, where it will be impossible to properly clean it up or control a gushing well-head. But you know how that goes... The bureaucrats and oil companies will worry about that when it happens. Fabulous.

Regardless, the Arctic drilling experiment in USA will continue in 2013. But I'm sharing with my clients and potential investors how to take position in the energy market on enhanced oil recovery and domestic operations in North Dakota for the big pay-day.
These are just a few of my predictions that I shall use to make my strategy in 2013 for the energy market. Of course, nothing is set in stone...
Major geopolitical events, social unrest, economic recovery revisions, Europes doomday, acts of God, Arab Spring. Israel/Iran tension. Potential war. Supply disruption. Pick your poison. All of these issues go with us into 2013, and the risk premium — which I calculate to be around $20 per barrel will remain. All of these things can make us change course at any given time. I will stay nimble.

Get ready for the oil disruption going forward. Saudi Arabia is quitting oil business in the next 10 years and changing their energy mix. It's a super tight oil market, and it will only get tighter. And the market knows this. It's pricing in the potential for all of these scenarios. And I believe at least of one will hit home next year...The geo-political and strategic position makes oil premium very high and oil supplies will remain under pressure. Oil is headed for $150 a barrel in 2013. Happy Investment in the energy market.

Disclaimer:: This is just a research piece and not an investment advice. All financial transactions carry a RISK.


  1. Sir I am following your blog regularly for last two years, well i just have question for you that last year in august or September you wrote and article after ARMCO's announcement for quitting the oil business in next few years, and you stated that oil prices will hit $150 dollars per barrel but in reality it was flosting below $100 could you justify the scenario please

  2. Humair Rasheed
    Oil prices will continue to remain high. Pull back and consolidation are part of the financial market. Saudi Arabia is quitting oil business and moving into shale gas, nuclear and solar energy. I admire the strategic leadership of ARAMCO and SAUDI Royal family. The family is investing $130 billion in shale gas alone.

    I am not sharing earth shattering information. But, it could be very surprising for many readers, investors and the major market players in the oil industry. Saudi Arabia might become the oil importer in the next 15 years. This statement is backed by facts and Saudi Arabia is moving on a fast track into SHALE GAS, NUCLEAR, SOLAR AND WIND ENERGY to meet her growing energy requirement going forward. The world top oil exporter of crude oil will become an importer. You might think, I have gone insane about the energy market. But that is the true fact. Saudi Arabia plans to invest over $357 billion in the energy market in the next 10 to 15 years. That’s a massive capital expenditure development in the gulf region.
    SAUDI PRODUCTION: Saudi crude accounted for around 13% of U.S. oil imports last year, and the nation produced 11.1 million bpd of oil products in 2011.
    ECONOMIC ANALYSIS: The nation depends on the petroleum sector for over 80% of her revenue, 45% of her GDP, and 90% of her export income. This is a nation that functions solely because she produces petroleum.
    Saudi Arabia already has a higher per capita consumption than the United States. This consumption will likely grow even quicker than the population. This means a much greater demand and a much greater strain on production and exports.