Bullish on energy longer term

 11 Dec 2021

Dear Fellow Investor,

I am bullish on energy longer term.

Weekly chart of Brent Crude continuous futures contract

Note the a 7 week bearish reversal in crude, price held at the 50 week moving average and reversed reaffirming the uptrend closing up 7.14 % for the week. This was in spite of Biden releasing oil from the strategic reserves and pressuring Middle Eastern countries to increase supply. Biden is in trouble politically due to US inflation at a 30 year high of 6.8% and petrol prices up 55 % year on year.   Biden is desperate to keep power   leading into the mid term elections next November and  his cronies in the Federal Reserve will continue to suppress interest rates and flood the economy with stimulus and free money. Inflation is the result. To please the progressive wing of his party he also wishes to get rid of fossil fuels by shutting down oil pipelines, increasing regulations and ending drilling on federal land. He is also pressuring banks to stop financing for oil exploration.  Green energy which Biden supports has a future but it will take time to become cost efficient. In the meantime demand for fossil fuels especially in Asia continues to soar. Asia is not adverse to fossil fuels so increase in demand will not be met by solar and wind expansion alone.  Europe is suffering an energy crises especially now as Winter arrives. There are worries in the UK over electricity and heating during the cold Winter months. While the US, UK, Canada and most European countries do not support nuclear power or fossil fuels,  France, China and  other countries are  expanding their nuclear power plants to create  a reliable and cheap energy source without a carbon footprint.  This should please the progressives and green movement.

I am bullish uranium and the way to play it is the Sprott Uranium Trust which trades on the Toronto Stock Exchange. It deals in physical uranium which is currently trading at less than cost of production. This is a recipe  for large price gains with limited price risk. Call me if you want more info on this.

I am also bullish oil companies which generally pay handsome dividends. Exxon Mobile is one yielding over 5 %. Dialog  also has potential due to Asian exposure.

The KLSE broke 1500 last week amidst the never ending bad news. There does not seem to be a catalyst to reverse the trend but value is emerging. Buying quality shares at these levels is a good bet if you are willing to position yourself  and wait patiently for recovery.  

Take care
Bill

Therapy dog helping with vaccination of reluctant child.