Thoughts from the week and opportunities ahead.
A few interesting take-aways and observations from the markets.
Potential Upside in Tanker Market.
After the market closed Friday, the US treasury announced additional sanctions that will target Russian Oil tankers. Tanker rates are already elevated due to issues with the Red Sea route and ships getting targeted by the Houthi’s. These sanctions should send prices even higher, the market is asleep on the tanker market right now. This could be an area of the market to watch next week.
If these sanctions are not effective in slowing down Russian Oil getting to market, we can expect even more additional measures in 60 days, when they will re-evaluate if they were effective.
I am not saying this is going to happen and this is a different situation but it is eye opening to see what occurred to prices in 2019. In this case the US sanctioned COSCO for shipping Iranian oil.
Cycle bottom in the PGM Market
The PGM market has been a mess over the last couple years and the stocks have gotten destroyed. Eventually this type of market leads to production curtailment and lay offs and we are beginning to see that. One of the most effective ways to make large returns in cyclical resource sectors is to buy the cycle bottom and be very patient. I believe we are at that point for Platinum/Palladium.
Here is the weekly chart of Sibayne-Stillwater, it’s close to $4 now from a peak of nearly $21 in 2022. I recently initiated a position in the stock and will continue to build my position out at these depressed levels. This one could take alot of patience which I am prepared for.
Natural Gas Volatility
Natural gas can be one of the most volatile commodities, it went from a peak of $9.50 in 2022 all the way down to it’s current level of $1.60. The market is currently oversupplied to due to US Shale production being very natural gas heavy now. At these prices, we are going to see many companies put a hold on production activities and a rebound in prices eventually. This is in turn also bullish oil prices.
It might be worth looking into different ways to play this rebound in Natural Gas prices. A return to a more normal price looks inevitable. I would say prices under $2 are an opportunity in this market.
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