Press Release June 2016 - NAMEA Energy Predictive Analytics

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Press Release - NAMEA Energy “Go long on oil”… 

http://www.namea-advisors.com/blog/get-ready-the-oil-price-is-about-to-rise-again

Forward Estimates: One of NAMEA’s core competencies is forward estimates.  In other words, trying to predict the future.  We think the ability to make forward estimates is what makes us stand out.  Others try to publish forward estimates, but if you read their future predictions for the year ahead, they are normally either so vague that they cannot be proved right or wrong, or they are just plain wrong.   Our PredictionIn December 2015 we decided that the current low oil price would not continue more than another 12 months and in February we followed up with a detailed assessment arguing that that by the end of 2016 oil would be at $60 and within 24 months it would be well over $100 (probably edging up towards $200).   At that time almost all commentators were saying we were looking at decades of low oil prices.In January The Economist declared:“The world is drowning in oil. Saudi Arabia is pumping at almost full tilt…Saudi Arabia will also be prepared to suffer a lot of pain to thwart Iran, its bitter rival, which this week

was poised to rejoin oil markets as nuclear sanctions were lifted, with potential output of 3m-4m b/d. … Forecasting the oil price is a mug’s game (as the newspaper that once speculated about $5 oil, we speak from experience), but few expect it to start rising before 2017. Today’s price could mark the bottom of the barrel. Some are predicting a trough of as low as $10.”http://www.economist.com/news/leaders/21688854-low-energy-prices-ought-be-shot-arm-economy-think-again-whos-afraid-cheapIn February Glencore's position was : “Oil prices will stay low for as long as 10 years as Chinese economic growth slows and the U.S. shale industry acts as a cap on any rally, according to the world’s largest independent oil-trading house.”http://www.bloomberg.com/news/articles/2016-02-08/world-s-largest-energy-trader-sees-a-decade-of-low-oil-prices. We spent two months closely analyzing the data and our projections, and in February we published an article that stated oil would be $60 by end of 2016 and over $100 by end of 2017.  The Underlying Factors Behind our Assessment-- All oil fields lose at least 6% of their production each year if there is no investment in increasing production.  There has been no major investment in any oil field for two years now.  So averaged across the whole industry we must see at least a 6% reduction in production over the next 12 months.   -- China's demand is increasing, even if increasing more slowly.-- India's demand is increasing.-- The world will need at least another 1 million barrels per day by the end of 2016.  Currently the world is using a little less than 96 million barrels of oil and refined products each day.-- The US shale market was surviving on futures contracts set at about $70, and those futures run out in April/May 2016.  Once the shale industry is bankrupted, it cannot be started up again overnight.  It's not a tap you just turn back on (although many seem to think it is).-- The US summer holiday season will result in a significant increase in oil consumption, as it does each year.-- Russia is reducing exports because of the needs of domestic consumption.

-- Iran's increase in exports will not be enough to replace Russia's reduction.

-- Venezuela is falling apart and the consequences will be years of oil production losses.-- Libya is too broken to be fixed in 2016, so it will not be putting more than 300,000 barrels onto the world market a day.We also did a comparative study of previous oil price boom/bust cycles. And that's how we reached our conclusion, published in February on the NAMEA website (http://www.namea-advisors.com/blog/get-ready-the-oil-price-is-about-to-rise-again). Three weeks ago Goldman Sachs finally agreed with us, as Brent hit almost $49.50 a barrel.  And analysis published in Forbes on 4 June — based on very similar logic to that which we used in December and February — also agreed with our prediction. 

We were months ahead of the competition. Please contact us for tailored assessments and analysis on the issues that matter today - long term security, social, political, economic and

energy assessments are our core business. 

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