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This is a Clear Path to Profits (Even in Volatile Markets)

by Dr. Kent Moors | published January 28th, 2014

It was quickly becoming OPEC’s worst nightmare. By the mid-1980s, oil prices had begun to collapse.

What’s more, renegade cartel members were selling more oil than their monthly quotas allowed, which merely made a bad situation even worse.

Ordinarily, that’s was a point when the Saudis usually would step in and cut their own exports.

But by then, the pricing situation had become untenable. Instead, the Saudis embarked on a bold new strategy.

First, they opened up their own spigots and flooded the market with crude. This taught those recalcitrant OPEC members a big lesson about lost revenues.

Second, they also introduced a “netback” pricing strategy that proved to be far more important – both for them and today’s energy investors.

This new strategy considered the entire pricing sequence, using refinery margins (the difference in cost between processing and prices on the wholesale level) as a measure of prices upstream and downstream.

Now, twenty-eight years later, the same netback strategy has made a comeback that has handed us a clear path to profits – even during periods of high volatility.

Here’s how this strategy works…

Part Two: How to Profit as the Energy Balance Shifts

by Dr. Kent Moors | published January 9th, 2014

On Tuesday, I told you how “energy rebalancing” is going to hand us some profitable new opportunities this year.

In Part One, I introduced you to three different dimensions of this unstoppable trend, but I focused only on the big changes happening in the energy network.

Several of the examples I used were global in nature and provide a great segue into the final two dimensions of energy rebalancing: The changing geographic considerations and financial arrangements.

Of course, “geographic considerations” refers to location.

And the three I mentioned on Tuesday – the Russian ESPO pipeline, European imports of liquefied natural gas (LNG), and China’s rapidly expanding presence in the South American energy picture – are perfect examples of the evolving geographic picture.

Yet, the geographic also introduces two other main elements.

That includes a dramatic shift in the balancing point in global energy markets, which means that where the demand is will drive the energy markets.

In this case, demand has moved significantly from North America and Western Europe to the developing world in general… and Asia in particular.

This trend will become even more pronounced in 2014…