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OPEC predicting oil shortages - energy investing

Badger Investment Group - Oct 12, 2021
Badger Investment Group will be hosting an informational seminar on investing in the energy sector. Each presenter will give a detailed outlook on the energy industry and their view on what to expect moving forward.
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Rising oil prices and the spreading global shortage of coal, gas and electricity have drawn buying interest from hedge funds and other money managers in oil-related derivatives contracts[1]. For many fund managers, concerns about an energy crunch in coal, gas, electricity and oil have replaced earlier fears about a resurgence of coronavirus infections.

In the aftermath of the coronavirus recession, energy production has failed to keep up with rapid growth in consumption as energy producers struggle to raise output while demand has bounced back quickly. The business cycle downturn and a slump in energy prices caused by the pandemic, and before that, the U.S./China trade conflict depressed investment throughout the energy sector in 2019/2020.

Since then, the global economy has experienced an exceptionally rapid cyclical recovery, aided by low-interest rates, bond-buying and massive government spending, which has focused on energy-intensive merchandise rather than services, boosting energy consumption at extraordinary rates. The result is a severe cyclical shortage of energy, evident in below-average inventories and surging prices for coal, gas and oil in all the major consuming regions of the world[2].

Unusual weather has worsened the shortages, including a cold winter in the Northern Hemisphere in 2020/21, a late winter storm in Texas in February 2021, slow wind speeds in Europe in August-September 2021 hurricane-related disruption to oil output in the Gulf of Mexico[3].

In recent months, China has reported low coal stocks at power stations, and the government has urged major producing regions to boost output as a matter of urgency; coal futures prices have more than doubled from a year ago.

Energy industries have always exhibited strongly cyclical behaviour. The bigger the initial disturbance to production, consumption, inventories and prices, the larger the immediate response, and the larger the subsequent reaction. In this case, low inventories and high prices for coal, gas and oil are the direct consequence of high inventories and low prices this time last year caused by the first wave of the pandemic. Following an exceptionally rapid economic rebound, global industrial production and world trade volumes are down by less than 1% compared with their pre-pandemic and pre-trade-war trends. Global spare capacity is limited, especially in merchandise-producing industries, which are far more energy-intensive than service-producing sectors. Consequently, global energy consumption is running very close to its long-term trend, with isolated exceptions, the most important of which is a sharp drop in the use of jet fuel for international passenger aviation. With large sections of the global economy operating at close to full capacity, the energy system is struggling to meet incremental demand, and prices are accelerating as a result.

Badger Investment Group will be hosting an informational seminar on investing in the energy sector. Each presenter will give a detailed outlook on the energy industry and their view on what to expect moving forward. To register for this seminar, visit our website at https://badgerinvestmentgroup.com/seminar-registration or email dbredo@cgf.com.

Presenters include:

Geoff Badger

Senior Vice President & Portfolio Manager at Badger Investment Group

As a Family Enterprise Advisor (FEA), Geoff has been working with families around the world since 1994 to help them discover what is most important to them, identify their potential and develop and implement a well thought out legacy strategy that is aligned with their core values.

He holds several industry designations including: The Family Enterprise Advisor (FEA) Designation from the UBC’s Sauder Business School. This program uses a multi-disciplinary approach where FEAs learn to integrate their own discipline, with those of other professionals, to provide collaborative and complementary advice to wealthy families. The CFA designation from the CFA Institute. The Chartered Financial Analyst (CFA) gives a strong understanding of advanced investment analysis and real-world portfolio management skills. Using the vast array of tools and resources at his disposal, Geoff is committed to leading a revolution in legacy planning – setting a new standard for the kind of advice and guidance all families should demand from their advisors.

Tim Pickering

Principal, Lead Portfolio Manager, CIO at Auspice Capital

Tim Pickering is Founder, President and CIO of Auspice. Tim leads strategic decision making and the vision for Auspice’s diverse suite of award winning rules-based quantitative investment strategies. Tim believes that in the future, non-correlated alternative investments will be a core holding in all portfolios, regardless of investor size or sophistication. Alternatives will no longer be viewed as risky, but as conservative and prudent, given the measurable value to investment portfolios. He is passionate about creating innovative investment strategies and products that the market needs with distribution through reputable partners at a fair price. In 2015, Tim was selected by Alberta Venture Magazine, one of Alberta’s most widely respected business publications, as one of Alberta’s 50 most influential people. In 2017, Tim was named to the University of Calgary Accounting and Finance Advisory Council and in 2019 became the Chair of the Finance Advisory Council at the Haskayne School of Business. In 2020, Tim was elected to the Board of the Calgary chapter of Pheasants Forever, a globally respected habitat organization dedicated to wildlife, land management, conservation and education.

Eric Nuttall

Partner, Senior Portfolio Manager at Ninepoint Partners

Eric Nuttall is a Partner and Senior Portfolio Manager with Ninepoint Partners LP, where he manages Ninepoint’s Energy Fund. He joined the firm in August 2017 and was previously a Portfolio Manager at Sprott Asset Management LP since February 2003. Eric's views are frequently sought after by the Business News Network (BNN), The Globe and Mail, the National Post, the Calgary Herald, CNBC, and the Wall Street Journal. Eric graduated with High Honours from Carleton University with an Honours Bachelor of International Business.

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We would be happy to offer this no-obligation portfolio review process to you today - and the best part is, the worst news you will receive is that your existing portfolio is thoughtfully constructed and seems to be a good fit with your current objectives!

If you have any questions about our process, feel free to contact us by replying to this email, giving us a call or connecting with us through our website.

 

CANACCORD GENUITY WEALTH MANAGEMENT IS A DIVISION OF CANACCORD GENUITY CORP., MEMBER-CANADIAN INVESTOR PROTECTION FUND AND THE INVESTMENT INDUSTRY REGULATORY ORGANIZATION OF CANADA This document is for general information only, not intended to provide tax, legal or financial advice, and under no circumstances should be interpreted as a solicitation to act as a securities broker or dealer in any jurisdiction. All views are intended for general circulation only and do not have any regard to the specific investment objectives, financial situation or general needs of any particular person, organization or institution. All investors should consult with a qualified investment advisor or tax professional before making any investment decisions. Tax & Estate advice offered through Canaccord Genuity Wealth and Estate Planning Services.

 


[1] https://www.reuters.com/business/energy/worldwide-energy-shortage-shows-up-surging-coal-gas-oil-prices-kemp-2021-09-24/

[2] https://fingfx.thomsonreuters.com/gfx/ce/jnpweykajpw/GLOBAL%20ENERGY%20PRICES.pdf

[3] https://www.dw.com/en/energy-crisis-harsh-winter-would-add-fuel-to-climate-change-fire/a-59335095