Next Profit Opportunity in Energy

Aug 4, 2021

Vijay Bhambwani, Editor, Fast Profits Daily

This video is an update on our next profitable trade in energy.

I hope after watching this video, you will realise just how my 360 degree worldview will help you make big trading profits.

I'll cover two related geo-political events which shed light on the depth to which I go in my research.

If this video has broadened your horizons then do let me know in the comments. I love to hear from you.

Hello friends. I hope you're doing great in the markets and the markets are treating you well.

So far my last two videos about what can take the markets up sectorally and giving you index-wise views of what's happening out there is working out well.

Now in this video, I want to carry out two tasks actually. Give you an update about energy and at the same time, acquaint you or kind of familiarise you with the manner in which a crude oil or a natural gas trader deploys that 360 degree worldview. To one extent do we watch? How much do we really care for detail? So here goes.

I think energy is not a very easy commodity asset class to trade. It's about speculation. It's about geopolitics. It's about military. It's about terrorism, and it's also about the demand/supply.

So veteran oil traders who are watching this video will instantly identify with me when I say there are at least minimum, minimum, three types of premium built into the price of crude. Speculative, political, and terrorism. Of course, there are many more but these are primary chunks which determine the price.

So at any given point in time, demands/supply could be going here but the price could be going the other way round. Confused? Yes, most people are.

Natural gas is even more complex to trade. So we get even more detailed when we basically walk in to these minefields. What has happened in the recent times has impacted the price of natural gas significantly. Here goes.

Last week, on Thursday, a ship called Mercer Street, which was a Liberian flagged but Japanese owned, was carrying petroleum products and was managed by an Israeli maritime company called Zodiac Maritime, came under a mysterious attack.

Now the United Kingdom, Israel, and Japanese are claiming that it was a drone attack which basically killed two crewmen. One was a Romanian national and the other was a British national.

So the meeting, which was held in the United Nations Security Council on Tuesday, which happened to be chaired by none other than our Prime Minister, Mr Narendra Modi, the UK and Israel have made a very strong case against Iran, saying Iran must be held responsible for this attack.

On the other hand, Iran is denying this attack, saying they are nothing to do with it because there is no valid proof being presented to the United Nations Security Council.

But before you think it is all about one ship, it gets even more complicated. On Tuesday, while the UN Security Council was determining what plan of action to take next, something even more bizarre happened.

Very close to Fujairah in the United Arab Emirates, another vessel carrying asphalt products, called the asphalt princess, was hijacked by eight or nine armed men who basically got aboard the ship and forced the crew based on gun point of course to basically disappear under the radar.

Now, here again, Iran is basically defending itself and saying, if we are already being accused for the attack on Thursday and the meetings are going on Monday and Tuesday, why would we want to hijack another ship?

But the UK and particularly Israel, are of the opinion that this is nothing but a brazen act of war by Iran.

The Iranian Revolutionary Guard Command, the IRGC, which is the elite commando forces, has absolutely denied its involvement or Iranian regular army involvement in any of these, the drone attack and the hijacking of the vessel on Tuesday.

Now what does this have to do with prices of crude? Why have crude prices not risen? The answer is that OPEC has raised its output to a 15 month high.

Those of you who watch my videos regularly will recollect that I have been blatantly cocking a snook at various theories, which point towards US$100 per barrel for crude oil in 2021. Guys, I still think it ain't happening and the lower circuits that crude oil is hitting, these are not indications that crude is going to 100 anytime soon.

If it does go there and kiss it and come back in 2022 Weekly Cash Alert subscribers will get another profitable trading opportunity from this. Remain assured.

So why is crude going down but natural gas going up?

Now, you see, the logical fallout is Iran happens to be a swing producer of both national gas and crude oil. Unlike many other OPEC countries, which focus purely on liquid fossil fuels, which is crude oil, Iran also produces very high quality, high calorie natural gas.

So far the American government has imposed sanctions on Iran on its crude oil exports but Iran is managing to export natural gas.

Do remember that the Chinese don't really care much for sanctions or any other political compulsions. They go about doing whatever they need to do.

But natural gas traders are fearing that any attack or retaliation by Iran or the UK, UK by the way, has sent its special forces in the region and rumours in the natural gas market is that Israel will be sending its commandos fairly soon.

As I told you, these are rumours. Please beware. So I am keeping my ears to the ground on developments on this front, and I think if it all the situation escalates, the market expects that Iranian crude is as it is, out of the market but even Iranian gas might be curbed from coming into the market, which is one of the reasons why natural gas prices went up in the last three or four trading sessions.

You know that Mercer Street was attacked on Thursday last week, and if you see your price charts of natural gas, you will realise that it's been on the uptrend since, and Tuesday's hijacking of the asphalt princess from the Gulf of Fujairah has only added fat into the fire.

As of last night, I actually saw, which means Tuesday night, I am recording this video on Wednesday, it will be uploaded after post production work on Equitymaster's playlist on Thursday, on Tuesday night, I saw the entire commodity trading terminal showing red, which means all commodities were down, barring only natural gas. Now, on Tuesday, national gas was the sole gainer only because of the hijacking of the asphalt princess.

So the next trade in natural gas might be delayed a little but we are still proceeding with the blueprint that you have received via morning mailers and the weekend mailers. The blueprint remains in force. Do remember that this conflict is passing phenomena. We don't expect World War Three to culminate from this event at all.

With this update, I'll say goodbye to you not before reminding you that 9th of August at five pm, I have very interesting webinar coming up on Equitymaster. I want you to save the date, block the date, be with me at 5 pm for this webinar.

Before I sign off from this video, I would like to remind you to click like on this video if you agrees with what you saw. Subscribe to my YouTube channel if you haven't already done so. Click on the bell icon to receive instant alerts about fresh videos being put up out here.

Good, bad or ugly, I love to hear from you in the comment section. Help me reach out to fellow like-minded investors and traders by referring my video to your family and friends. Till we meet again in my next, this is Vijay Bhambwani signing off for now. Thank you for your patience. I wish you have a very, very profitable day ahead, my friends. Bye.

Warm regards,

Vijay L Bhambwani
Vijay L Bhambwani
Editor, Fast Profits Daily
Equitymaster Agora Research Private Limited (Research Analyst

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