This is an important indicator of the markets recognition of nuclear power as a key to reducing carbon emissions, and as a foundational part of a “green” economy going forward. MoneyTalks guests like Peter Grandich gave us the heads up on the opportunity in uranium months ago. This decision by Sprott is institutional money jumping on board in a big way. ~ Ed

UPC is the world’s largest publicly traded investment vehicle providing investors an opportunity to gain exposure to the price of uranium, outside of a traditional mining company, through holdings of physical uranium in the form of uranium oxide in concentrates (“U3O8”) and uranium hexafluoride (“UF6”). At the end of March 2021, UPC reported holding 16,269,658 pounds U3O8 and 300,000 KgU as UF6, with a then market value of approximately C$665 million.

“Sprott Asset Management currently manages four physical commodity funds with approximately US$12 billion in assets under management,” said John Ciampaglia, CEO of Sprott Asset Management. “We believe our global brand, fund marketing experience, and client base of more than 200,000 investors will improve trading liquidity and grow UPC’s asset base during what we believe is the start of a bull market for physical uranium.”… Click for the complete article

Each week Josef Schachter will give you his insights into global events, price forecasts and the fundamentals of the energy sector. Josef offers a twice monthly Black Gold newsletter covering the general energy market and 30 energy and energy service companies with regular updates. We hold quarterly subscriber webinars (next one May 13th) and provide Action BUY and SELL Alerts for paid subscribers. Learn more. 

EIA Weekly Data: The EIA data on Wednesday April 28th was mixed with a positive bias for prices. US Commercial Inventories rose by 0.1Mb to 493.1Mb (versus an expected decline of 0.1Mb). Demand last week rose by 1.63Mb/d to 20.4Mb/d as product usage rose for Distillates by 475Kb/d, Residual oil by 211Kb/d and Propane demand rose by 471Kb/d. Gasoline demand fell by 227Kb/d, while Jet Fuel consumption rose by a modest 9Kb/d. The big reason for the build in inventories was due to imports rising by 1.21Mb/d or by 8.5Mb on the week. One other item supportive of prices was domestic production fell off by 100Kb/d to 10.9Mb/d. We see this decline as due to weather related issues. Refinery Utilization rose 0.4% to 85.4% and is above last year’s 69.6%. Cushing Inventories rose last week by 0.7Mb to 46.1Mb.

Baker Hughes Rig Data: The data for the week ended April 23rd showed the US rig count fell by one rig (rise of seven rigs in the prior week) and we see this as due to weather issues in the US south. Canada had a decline of one rig (two rigs lower last week) as we are still in the spring break-up season and the road bans have not been lifted. However, Canadian activity is now over double the pandemic lows of last year. There are 55 rigs working in Canada now compared to 26 rigs working at this time last year. In the US there were 438 rigs active, down only 6% now from 465 rigs working a year ago. The oil rig count in Canada was unchanged at 17 rigs working and is up from eight rigs working last year. The natural gas rig count was down one rig to 38 rigs active but is up from last year’s level of 18 rigs at this time last year.

Conclusion:

WTI Crude oil prices have risen today by US$0.78/b to US$63.82/b due to the US lower 48 production 100Kb/d decline, the increase in consumption of product last week and on general optimism of a world wide demand return in the coming months. We remain in a trading range between US$58-64/b. A closing over US$64/b would energize the bulls and a close below US$58/b would accelerate the bearish view. While at the top of this trading range we remain bearish on crude prices in the near term, due to the pandemic spread widening and more lockdowns occuring.

Over the next three months OPEC will increase production by 2.1Mb/d, more than is needed for world wide demand growth into late 2021 which will help to drive crude prices lower. We expect to see a sustained and meaningful breach of US$60/b in the coming weeks.

Bearish pressure on crude prices:

1. OPEC (outside of the Saudis) will be adding 350Kb/d in May, 350Kb/d in June and 440Kb/d in July. The  Saudis will separately ease their cuts by 250Kb/d in May, 350Kb/d in June and 400Kb/d in July.
2. The US and Canada are being hit by more cases and faster spread of the mutations (now over 50% of all cases). Alberta is now seeing an 11.4% positivity rate, the highest since the pandemic began and Nova Scotia announced today a two week province wide shutdown. Ontario is moving iCU patients out of high hit areas like Toronto to across the province and has even sent some down to US border cities. The US has now detected a new variant BV-1 that shows signs of antibody resistance and more severe illness in young people.
3. India is seeing more lockdowns as daily infections rise to 353K/day (up from 274K a week ago) and the total number of cases has risen to 17.6M (up 2.3M in just one week and ahead of Brazil and second only to the US). The country is facing a severe shortage of oxygen supplies. Fuel demand has fallen 90% in some cities. Prior to the virus flare-up in India motor fuel demand was 750Kb/d and diesel sales were 1.75Mb/d.
4. Vaccine hesitation is at 30% of the US population so herd immunity may not happen by the summer time as expected. The US as of yesterday was at 573K deaths.
5. Japan’s two largest cities (Tokyo and Osaka) are moving to a declaration of emergency to contain a surge in cases just three months before the delayed summer Olympic games.

Bullish pressure on crude prices:

1. Rising vaccination levels in the US is increasing the comfort of going out, lifting energy consumption.
2. Optimism over international travel as restrictions are lifted, is gaining momentum and some forecasters expect global jet fuel demand will rise by1.5Mb/d by year end.
3. Vaccine trials for children are underway and approval for injections may occur this summer so students can get vaccinated before the start of the fall school year.
4. Vaccine passports are getting more support from countries increasing the likelihood of a 2021 summer tourism industry in Europe. The UK may lead the way with passports and may start to issue them as early as next month.
5. The US Congress is moving with antitrust suits against OPEC. The NOPEC bill has passed in the House Judiciary Committee. The Congress is angry with the manipulation of crude oil prices by OPEC. Based upon current excess inventories and spare worldwide crude capacity they see oil prices as much too high.

CONCLUSION:. The next few months should see material downside for the energy sector. The topping process for the general stock market is ongoing and some ‘Black Swan’ event will prick this bubble.  

Energy Stock Market: The S&P/TSX Energy Index now trades at 117 down, up four points from the 113 level of last week’s report. The S&P/TSX Energy Index is likely to fall substantially in the coming months. A breach of 111.59 (only a short distance away) should initiate the next sharp decline. An initial downside target after such a breach is the 100 area.

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The price of agricultural commodities like wheat, corn and soy have been absolutely soaring lately.

There are a number of factors driving the move, though one contributor is simply the lack of a robust supply response so far to all the demand. Yesterday on TV we spoke with Scott Irwin an agricultural economist at the University of Illinois, who cited surprisingly moderate planting intentions as being a driver of the huge move up in prices since the beginning of April.

Meanwhile, if you haven’t noticed, copper is getting close to trading at $10,000 a ton on the London Metals Exchange.

And as Thomas Biesheuvel reported today, companies and investors are still reluctant to expand mining despite the surge, making the types of long-term bets that would bring on more supply. This of course has the effect of making futures markets tighter, pushing up prices all else equal.

Yesterday I wrote about how prices are high on many goods today because of past choices that reduced supply. But it’s clear that those choices are still being made right now, whether it’s reluctance to invest in new mining capacity, or farmers remaining conservative in their planting decisions.

(Bloomberg) — Investors looking to gauge the strength of the global recovery need look no further than metals markets.

Copper’s at the highest in a decade, aluminum is surging, and iron ore is closing in on a record as steel prices climb. Underpinning gains, which are taking commodities toward the highs of the last supercycle, is growing evidence that the world’s largest economies are shaking off the coronavirus shock and their growth roadmaps will have a decidedly green focus.

The U.S. recovery is accelerating and President Joe Biden’s $2.25 trillion infrastructure plan will highlight sectors like electric cars, driving further gains in commodities critical to the green-energy transition. That’s coming alongside a continued economic boom in China, where a push to reduce emissions is already filtering through to supply cuts for some metals just as demand is picking up.

“Global demand is recovering, led by China, while the green transition is bolstering sentiment further,” Zhu Yi, an analyst with Bloomberg Intelligence, said by phone. “In short, demand will stay resilient, while supply won’t expand, upside momentum will go forward.”

Metals extended their surge at the start of the week. Copper in London was up as much as 1.6% to $9,704 a ton, the highest since 2011. Iron ore in Singapore jumped to the highest since contracts launched in 2013, while Chinese steel futures reached fresh highs.

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