Large one day move. The lift off the bottom is due to a 8.7% production cut by industry oilsands players as mandated by a ministerial order of the Alberta Government after a series of consultations on how to eradicate a once in a generation supply glut of oil unable to find a market access point.
The lack of pipelines and extra scaled up projects a few years back created a unique price storm that drove Oil prices for blended heavy oil into the toilet.
Who to blame is left to other blogs, the thing to know is what is the situation of how the actions taken by industry, government and banks is setting up a multi-year story that has unknowns and opportunity for the educated investor wary of oil and gas paradoxes.
When things look their worst, from government or price the moment in time you arrive at a perspective is locked in to a generational view, political view, economic view or personal experience. Many experts get this wrong. Governments change, companies change, currencies and policy also change.
The multiplier effect of change can dislocate or distort what the DATA or MARKET is telling you. Nothing but what actually happens matters. You can have 3 PhD's and be Isaac Newtons lineage and it simply doesn't matter in the world of 24/7 energy markets.
Things don't work in straight lines. If you have an MBA or PhD you will go batty when what is supposed to go up, instead falls even if your models and homework and peers suggest otherwise.
Cycles are non linear they are zig zaggy. Math might statistically tell you X and the market will hand you Y. As you explain to your boss that you didn't know the market was full of idiots that pay attention to the wrong signals that you calculated ~ it doesn't matter.
All you need know is Force 1 is playing hardball. Force 2 is trying softball. Force 3 is using A.I. to listen in on the coach of Force 1 and Force 2 to out manuever their game. Force 4 is jamming the signal of Force 3. Force 5 is cashed out and waiting for someone to do something stupid.
That is one perspective. Whether Ukraine and Russia do this or that. Whether Egypt has $5 costs and Texas has $35 is of no matter for the leveraged trader using house money with zero interest costs for gambling on any outcome.
You don't have the capital or the computer power to compete with insiders, so best to look for long cycles and not be a trader, be a "This is really low and stopped falling" investor and nibble, then wait for confirmation and avg in over many months. If you have no time, hire a broker with 6 references.
See how green this chart is? Its been red for 5 weeks straight. Today is first hope that something has to give.
This ETF is a weird one to grasp, its not what it appears. It's like vegan food isn't meat. The product is a Discount, you can trade the discount on a blended oil that as volumes increase and as prices recover will make you a return over time.
Its never supposed to move 36% in one day. The Move is a signal to pay attention to, something big just happened and is about to happen.
The back up supply of 35 million barrels in storage (Glut) in Alberta reached the painful enough point that the government stepped in. The resource owned by the people but managed by custodians just got enough attention that a decision was made to wade into free markets and play referee out of an unfair and unusual market dynamic not seen maybe ever.
The podcast by two savvy energy specialist will bring you upto date on the past weekends drama in Alberta.
https://www.arcenergyinstitute.com/western-canada-oil-glut-to-cut-or-not/
The bottom line, price is too low and the options are too far in the future to wait so action has been legally taken to force with previous consultation on production cuts of 8.7%.
The price of the blend at issue bounced the very next day, giving the optics and idea that for now it worked.
There are many prices of oil. Some for what isn't in them, some for what is added, some for what land or sea they reside near, some for how well they flow, some for whether a refinery can accept them, some tugging a boat, cruiseship or navy vessel.
One thing that matters, is delivering what is ordered on time, on budget and exact quality and price agreed upon.
The geology of western canada is blessed with an uncanny paradox. Enormous and i mean enormous scale of rock with a unique history where mountains, forests, and really productive dirt meet.
The natives were once in a canoe and travelling across a tributary in a boreal forest when they set up camp for a night.
The black flies were everywhere and not too pleasant to endure, the canoe was near a large wall of overburden on the riverbank and was saturated with a strange black dirt that appeared curious to the man fighting the flies. He broke a piece of the black dirt off the riverbank and carried it back to the fire at camp. Thinking not of the consequences he threw it into the fire. Immediately the fire grew bigger and the dirt spirit in the rock unleashed a flash of both heat and smell unseen by any in the presence of the fire. Soon the others noticed the pesky flies were no longer bothering camp. The fire died down as the evening and full moon wandered on. The man noticed the wet black spot on the edge of the dirt lump and pushed it off with a stick. As it cooled it stuck to his fingers a black waxy sticky substance that was awful hard to remove. His mate observed this and after the humor subsided he beckoned his friend to the canoe. They turned it over and rubbed the black oily goo on the canoe bottom where a crack had been. The ease of filling the water leak in the boat was quick and worked. The idea was born to carry some of the dirt to the next camp in the canoe to trade with other adventures in the west. Fast forward to the mid-1860's and the reality of eastern canadian geoscientists travelling out west to NE Alberta for the first time. The Canoe sealant was now a topic of geological mythology among the academics of Ontario and England. Though no unicorn nor saskquatch was seen in the fort, the natives did canoe the geologists to a region where they could see the mysterious rock for themselves. Soon 2 men turned into 15 with books and clipboards and disbelief became "what if" this whole region is saturated with this stuff. The only true way to know was dig, and so they did. Next year 75 earth scientists arrived to expand the believers, the next year 150, year after 250 and so it went until the size was to vast to quantify. It was simply abundant.
So maybe the story above was a distraction, but the history of the oilsand is long and old. The earth knows how she formed and the rest of us try to get the story a piece of data at a time. Today in 2018, the reality is the majority of countries that do not have oil still desire to live a better life. The resource is precious, its a dense organic material that is stored up energy in a density that is unmatched for really its sunshine applied to something that grew and lived and decayed. Millions of years of sun, created vast stores of energy and the unlock code to access that historical energy is cracked by chemistry, thermodynamics, physics and much labor.
The ability to offer a unit of energy at a known price for a length of time is by first having a vast resource that can be quantified to be available long enough to build a project that has a break-even curve worth taking on. That box is checked. Next is a big customer to order enough to make the viability of gathering resources and focusing on delivering them - that too is checked. Next is innovating and efficiently zeroing in on how to be the best you can be on metrics you won't even know matter until decades from now, that is on the table now.
So today, might be the very first day of the longest and most important lift off the bottom for the critical supply of the most important link in human productivity to date. In my opinion, we need this stuff unlocked to get the folks who have the least of it, the most affordable supply in the most efficient manner.
To do so, we need no social license of the haves, they no not what they have. Unless they travel to poverty stricken nations they know not the fruits of the labor and risks taken to give them what they lack to understand had a price to enjoy far above the dollar cost and too vast to abbreviate in a paragraph.
The responsible development has no publicity, the loser is the have not nation who cannot ever hope to compete or enjoy the benefit of work done for them without a taste of what energy does to improve the life of one who has it.
The ability to invest a dollar and get back $1.10 is not greed. It's the pay for doing what paid for by its utility or usefullness. ieThe nursing home that grandma lives in is heated by a joule. That joule has a history and price and risk and cost. The schoolbus, the mag lev train, the lear jet or cargo jet - each part of a work done for you lifestyle 95% of the population have no concept of, no respect for and no skin in until they re-fill the BBQ, or SUV.
You can choose to think otherwise, you can be who you want - just understand the consequence of where you want the $0.10 on top the $1.00 to go. Choose one supplier, or country and this or that outcome occurs. The other, and that other thing occurs instead. Its your choice. Most people in most countries have no choice, no option.
To change that, be informed. The decision is a vote with your wallet type thing. I subscribe to try to be better than you used to be. If you got this far you have an ability to soak this all in and takeaway the perspective offered.
Today was an inflection point, its historic to those that read between the lines of policy, trade, economics and energy and a shift is on its way. I know the deserving folks with the best ideas and practices will win the minds first and hearts second. I want you to be one. Invest in responsible energy while you still have a choice.
