Energy Markets

Energy Demand will Increase 58% Over the Next 25 Years

Trillions will be spent to secure the world's energy supply over the next two decades...and all sources are on the table. Oil, natural gas, nuclear, solar, wind. There will be money made. Follow the money trail.

Energy Outlook: Natural Gas

The most important moment in the history of natural gas occurred on November 10, 2004 and that changed the face of the U.S. natural gas industry forever.

That day, Range Resources drilled the first well in the Marcellus Shale.

And it’s the Marcellus Shale that has single-handedly propped up the U.S.’ natural gas supply. In June 2017, approximately 565.7 billion cubic feet (ft.3) of natural gas was extracted from beneath Texas soil. This accounts for one-quarter of our total marketed gas production. But, gas production in Texas has actually declined since December 2014.

Pennsylvania is a different story.

Up until 2010, natural gas production in the Keystone State has been essentially nil. It wasn’t until the Renz 1 well was drilled that companies started to realize the potential blockbuster play at stake. Once that first well was completed, it was only a matter of time before the Marcellus was unlocked and tapped.

Between 2010 and 2016, natural gas production in Pennsylvania soared, and it seemed as if nothing could slow it down:

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But this surge in supply has had several effects, not the least of which is that production growth in the Marcellus Shale has masked output declines virtually everywhere else.

This new supply, however, also led to a massive supply glut as drillers started digging wells at a frenzied pace.

In 2018, we can fully expect U.S. year-over-year gas production to increase again. The Energy Information Agency (EIA) is projecting that our domestic production will rise 4.4 billion ft.3 per day over 2017 levels, which amounts to about 78.1 billion ft.3 per day.

Meanwhile, natural gas spot prices at the Henry Hub are also expected to rise next year, averaging $3.29 per million British thermal units (mmBtu) in 2018.

On the demand side of the equation, U.S. natural gas consumption remains at record levels. The U.S .natural gas market is only one piece of the picture here, which brings us to one serious growth catalyst for natural gas going forward: liquefied natural gas (LNG).

The LNG Wildcard

No outlook would be complete without discussing liquefied natural gas.

Between 2014 and 2018, the global LNG trade will find itself front and center among potential natural gas investments. Not only can we expect the LNG market to remain tight next year, but this bull market should last for decades.

 

Make no mistake: This is how the U.S. will ultimately become a net energy exporter within just five years.

In fact, the U.S. could even become the world’s largest LNG exporter within a few years.

Fatih Birol, the IEA’s executive director, recently told us: “The U.S. shale revolution shows no sign of running out of steam and its effects are now amplified by a second revolution of rising LNG supplies.”

With the U.S. shale production, there’s no denying the impact it’s having on the market. Beyond 2018, LNG will be a huge part of the U.S. energy trade.

About 12 years ago, there were only 15 countries even consuming LNG. Today, that number has swelled to nearly 40. So, it’s only natural that the U.S. — the world’s largest natural gas producer — not only penetrate the LNG market but dominate it.

Catching the trend early will always give you a leg up over the investment herd.

And just to put a little visual perspective on how much LNG exports will dominate U.S. natural gas exports, we feel this chart is worth a thousand words:

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The growth explosion that's about to take place in the U.S. natural gas trade within the next five years is the single greatest investment you can bank on in today’s market.

But that buying opportunity is closing fast...

American Exports of “Freedom Gas” Are Skyrocketing

American exports of liquefied natural gas (LNG) to Europe are skyrocketing.

And it's creating an incredible opportunity for energy investors to make huge profits.

The European Commission (EC) reported earlier this week that LNG imports from the U.S. have increased by 272% since 2018. EC data shows record LNG imports coming from the U.S. in March totaling 49 billion cubic feet (Bcf).

That's already a big jump. But it's only just the beginning.

Yesterday, U.S. Energy Secretary Rick Perry signed two export orders that will more than double America's LNG exports to 112 Bcf by next year! Yes, you read that correctly: The United States will more than double LNG exports to Europe next year!

Starting to see dollar signs yet?

Referring to the liberation of Europe from Nazi occupation, Secretary Perry said to reporters, “The United States is again delivering a form of freedom to the European continent... And rather than in the form of young American soldiers, it’s in the form of liquefied natural gas.”

Freedom Gas


The recent export order is a follow-up to a joint agreement made back in July 2018 between European Commission President Jean-Claude Juncker and President Donald Trump. In a joint statement, they said, “The European Union wants to import more liquefied natural gas (LNG) from the United States to diversify its energy supply.”

The United States has been exporting LNG to Europe only for a few years. Right now, the largest importer of American LNG is South Korea, which bought 248 Bcf from the U.S. last year. Other major importers include Mexico and Japan.

But these new orders are very likely just the beginning of more LNG exports to Europe and promise to open up an entirely new (and massive) market for American suppliers.

The latest export orders will double America's LNG exports to Europe to 112 Bcf.

But the European Commission says LNG imports could increase from there to 282 Bcf by 2023!

Miguel Arias Cañete, European commissioner for Energy and Climate, said, “Energy security is one of the key success stories of our transatlantic cooperation and one where we both have a keen mutual interest. Given our heavy dependence on imports, U.S. liquefied natural gas, if priced competitively, could play an increasing and strategic role in EU gas supply.”

By now I'm sure you see the massive investment potential here. This series of agreements and orders opens up a huge new market of U.S. LNG producers and promises incredible returns for their investors.

The natural gas market is shaping up to be one of the most exciting sectors in the energy field.

The U.S. is home to the world's fourth-largest natural gas resources. And right now, it is also the world's #1 producer of the fossil gas.

Fact is, demand for natural gas is soaring all around the world. Just here in the U.S., natural gas demand hit an all-time record high totaling 31 quadrillion Btu during 2018 — an increase of 10% compared to the previous year.

It appears to be a great time to open a new natural gas position in your portfolio’

Mexico’s Natural Gas Crisis

Mexico faces a hurdle that's bigger than any wall Donald Trump could ever build...

Our southern neighbors have a gas problem — a natural gas problem, to be exact.

It's pretty simple: Mexico already consumes much more natural gas than the country can possibly produce. And it's gonna need much more of the fossil fuel over the next several decades.

Anyone can see the dilemma. But while Mexico has the problem, America has the solution.

Let’s back up for a minute...

Mexico was once one of the world's largest oil producers. But after over 10 years of falling production, Mexico's crude output doesn't even rank among the top 10 producing nations.

And as a result, the nation's natural gas production has also dropped. Over the past decade, Mexico's natural gas output has declined by 28%.

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Some of the decline in oil and natural gas production can be blamed on lower energy prices.

The price of oil was on the rise for much of the beginning of the 21st century. That was, of course, until around 2013, when the bottom fell out for fossil fuel prices, which really threw a wrench into the clockwork.

When energy prices decline, as they did back then, spending to develop new oil and/or gas production naturally gets cut. Why spend money on something that's providing declining ROI?

What that means for supply, however, is that current and future production remains stagnant or, more often, declines.

And that's exactly what happened in Mexico.

In the past five years, Mexico's national energy company PEMEX has cut its capital expenditures by nearly 75%... 75%! This has contributed significantly to the decline in Mexican oil and gas production.

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Here’s the thing...

Mexico can't just start spending money again to develop new projects and expect a windfall of natural gas resources. It's not that easy.

You see, Mexico does have a significant amount of oil. It sits at 18th on the list of the world's largest oil reserves. But its proven natural gas reserves leave the country lacking. Mexico's natural gas resources rank way down at number 40 on the list of declining, nations with highest reserves. So while Mexico has plenty of oil, it doesn't have a lot of natural gas.

In short, Mexico's domestic natural gas production is tanking. And it has no way of significantly increasing it.

Now, that wouldn't be much of a problem if the demand for natural gas were too. But it's not. Just the opposite, in fact.

The Mexican government says it expects domestic demand for natural gas to increase 26.8% over the 15-year period between 2016 and 2031.

So at the end of the day, Mexico desperately needs to import natural gas.

That's where America steps in...The USA is the home to the world's fourth-largest natural gas resources. It's also the world's #1 producer of the fossil gas.

That's why the Mexican government also recently said it should continue to depend on imported natural gas via pipeline from the U.S. to meet local demand.

As we can see in the chart below, Mexico has relied on U.S. natural gas for a while.

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The Mexican government really has no choice for the time being other than to continue buying U.S. gas... meaning this is a trend that's expected to continue: more demand for U.S. natural gas from Mexico.

 

Natural gas is far and away the most popular way Americans heat their homes. About 50% of all U.S. houses use natural gas for heat. And in colder parts of the nation, up to 70% of homes are heated with natural gas.

A study published by British journal The Lancet analyzed data on over 74 million deaths in 13 countries between 1985 and 2012 to find that cold kills 20 times more people than heat. So natural gas really is more important than most people consider. Because it's a heating fuel, the demand for natural gas is cyclical. Every year demand for the fossil fuel increases in the winter and falls with the warmer temperatures.

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March is usually the time of year when demand for natural gas in the U.S. begins to slow and inventories being to rise. But, his year's late-season cold weather demand gives great support for our long-term bullish outlook for natural gas.

Fact is, natural gas is one of the fastest-growing markets in the energy sector. Since 1986, U.S. natural gas consumption has increased by 85%, and demand isn't slacking off. The EIA forecasts natural gas consumption in the U.S. to continue increasing another 40% between now and 2050.

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Because using natural gas is so much cleaner than other fossil fuels. Compared to coal, for example, natural gas emits half of the carbon dioxides when burned. Of course, they are not the best of friends, but among many environmentalists, natural gas is the preferred energy fuel.

With the demand for natural gas rapidly increasing here and in Mexico, U.S. producers of natural gas are set to have guaranteed customers for the next several decades.

American natural gas producers such as Chesapeake Energy (NYSE: CHK) and Anadarko Petroleum (NYSE: APC) are among those that we like most right now. We urge all energy investors to hold a long-term position with good exposure to natural gas.

RE: TRUMP AND PUTIN PHONE CALL

SPLITING UP THE MARKETS

  • THE EUROPEAN NATURAL GAS MARKET
  • THE VENEZUELA  OIL SUPLY

 

Energy Outlook: OIL

Crude Oil Prices Today

Oil falls on trade dispute despite surprise drop in U.S. crude inventories

 

SEOUL, May 9 (Reuters) - Oil prices dropped on Thursday amid concerns over the escalating trade battle between the United States and China, despite a surprise fall in U.S. crude stockpiles. Brent crude oil futures were at $69.92 a barrel by 0102 GMT, down 44 cents, or 0.63 percent, from their previous settlement.

U.S. West Texas Intermediate (WTI) crude futures were at $61.67 per barrel, down 45 cents, or 0.72 percent, from their last close.

The Sino-U.S. trade war has weighed on oil prices this week as heightened tensions between the world's two biggest economies could the global economic outlook.

Higher tariffs are set to take effect on Friday, during Chinese Vice Premier Liu He's two-day visit to Washington from Thursday.

Despite this, oil prices have been supported by signs of tighter global supply on the back of production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia. Both benchmarks have risen more than 30 percent so far this year.

Global supply has also been tightened by U.S. sanctions on OPEC members Venezuela and Iran.

"From a fundamental point of view, OPEC supply discipline is still in check, and U.S. supplies show tighter markets than expected while Asia demand is still robust," said Stephen Innes head of trading at SPI Asset Management.

"All of which suggests once the trade war-induced sell-offs abate conditions could settle themselves quickly," Innes said.

In a sign that Asia demand remains firm, China's crude imports in April hit a record for the month, at 10.6 million barrels per day (bpd), customs data showed on Wednesday.

China is the world's biggest oil importer.

An unexpected drop in U.S. crude inventories kept oil price declines in check. U.S. crude inventories fell by 4 million barrels in the week to May 3, 2019 the Energy Information Administration said on Wednesday.

Oil Prices Weighed Down

The Biggest Reasons Oil Prices are Being Weighed Down

There’s a good deal of uncertainty with oil prices.

Crude futures tumbled as the global community awaits next moves from OPEC as U.S. waivers expire, and record U.S. production weigh on prices.

For one, the U.S. crude supplies are up


The U.S. government just reported a nearly 10 million-barrel rise in domestic crude supplies – the biggest weekly climb of the year.  At the same time, crude production in the States was up 100,000 barrels to a record 12.3 million barrels a day.

“With the possibility of increasing pressure on OPEC to meet oil demand, it remains to be seen how much longer members and partners will be able to continue to maintain supply cuts,” said Mihir Kapadia, chief executive officer of Sun Global Investments, as quoted by Market Watch. “Investors will be watching developments closely, particularly with the expiration of sanctions waivers for nations that have been allowed until now to continue buying oil from Iran.”

Two, the U.S. just tightened sanctions on Iran

All in an effort to cut Iran’s exports to zero, which could usher in new uncertainty with oil?  The sudden moves to choke Iranian exports could wipe out a million barrels a day, or about 1% of global consumption.  To fill that gap, the U.S. has turned to Saudi Arabia.

Unfortunately, the Saudis have not made a firm commitment to do so yet.

“President Trump’s decision to zero out waivers for importers of Iranian oil on May 2 represents an audacious act of oil brinkmanship as the strategy of keeping prices contained now rests almost exclusively on Saudi Arabia’s willingness to open the taps amid accelerating global supply outages,” Helima Croft, global head of commodity strategy at RBC Capital Markets said, as quoted by CNBC.

The White House has also made it clear that it’s determined to sustain and expand economic pressure against Iran to hopefully end its threats against the U.S., partners, and allies.

U.S. special representative for Iran has noted that Trump is trying to get a “new and better deal with the Iranians… but it needs to be comprehensive, it needs to include all of the threats that Iran presents to regional peace and security, and the nuclear piece is the most significant.

We must also consider that tighter sanctions may not cause a supply shock

However, it does make the oil market much more vulnerable to potential shortages, near-term.  In fact, at the moment, some analysts believe the market is slightly under supplied.

At the same time, supply disruptions and outages are still a daily occurrence.

U.S. sanctions on Venezuela, for example has accelerated a plunge in that country’s output.  In Libya, conflicts have put the OPEC country’s supply at risk, too. Even in Europe, we’re seeing disruptions in supply to refineries.

As always, it’s a wait-and-see with what happens next in the oil trading pits.

10 Million Barrels a Day or Bust

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From each break from the + 90 level there was a shot taken at the increasing US Oil production with a calculation as to how much time it would take to break the back of US Fracking verses how much upside they can bring about and to what extent US oil production would fall?

The OPEC goal is stable oil prices at +75. Wishful thinking, as this strategy has immediate negative effects on very much needed revenue, if playing this game. But, play they will.

West Texas Intermediate (WTI) crude, April 3, 2019, closed at $56.46 a barrel. The commodity, which is in bear territory, is off 21 percent over the past four weeks. The $52 to $53 could act as a temporary support level for crude. Or the development of a defined trading channel; good option writing territory to suck income out of this volatile market; we’ll see.

On Wednesday, WTI snapped its longest losing streak ever, down 12 days in a row. Due to the severity of the oil decline, one should rule out a chance of a near-term bounce to the $59 to $60 a barrel.

An interesting confluence of resistance levels suggest it might be over for the upside for some time to come.  

It would take a further drop in OPEC production from the current announcement of the total OPEC+ production cut (as was announced at 1.2 million barrels per day) with 400,000 b/d coming from non-OPEC countries by a further amount. This amount would be such that both the Saudi and Russian economies could not afford. Revenue losses would result for the cartel and no member could handle it for very long?

OPEC needs to cut output by 700 000 bpd more for Brent to hit USD 70

So, they may just let it go to below 40 and try to do what monopolies due; engage in predatory pricing to stop US frackers in their tracks; but again, for how long?

OPEC Threatens To Kill U.S. Shale

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The Organization of Petroleum Exporting Countries will once again become a nemesis for U.S. shale if the U.S. Congress passes a bill dubbed NOPEC, or No Oil Producing and Exporting Cartels Act,

The oil minister of the UAE, Suhail al-Mazrouei, reportedly told lenders at the meeting that if the bill was made into law that made OPEC members liable to U.S. anti-cartel legislation, the group, which is to all intents and purposes indeed a cartel, would break up and every member would boost production to its maximum.

This would be a repeat of what happened in 2013 and 2014, and ultimately led to another oil price crash like the one that saw Brent crude and WTI sink below US$30 a barrel. As a result, a lot of U.S. shale-focused, debt-dependent producers would go under.

Bankers who provide the debt financing that shale producers need are the natural target for opponents of the NOPEC bill. Banks got burned during the 2014 crisis and are still recovering and regaining their trust in the industry. Purse strings are being loosened as WTI climbs closer to US$60 a barrel, but lenders are certainly aware that this is to a large extent the result of OPEC action: the cartel is cutting production again and the effect on prices is becoming increasingly visible.

Indeed, if OPEC starts pumping again at maximum capacity, even without Iran and Venezuela, and with continued outages in Libya, it would pressure prices significantly, especially if Russia joins in. After all, its state oil companies have been itching to start pumping more.

The NOPEC legislation has little chance of becoming a law. It is not the first attempt by U.S. legislators to make OPEC liable for its cartel behavior, and none of the others made it to a law.

However, Al-Mazrouei’s not too subtle threat highlights the weakest point of U.S. shale: the industry’s dependence on borrowed money.

The fact that a lot of this cash could come only from banks has been highlighted before: the shale oil and gas industry faced a crisis of investor confidence after the 2014 crash because the only way it knew how to do business was to pump ever-increasing amounts of oil and gas. Shareholder returns were not top of the agenda. This had to change after the crash and most of the smaller players—those that survived—have yet to fully recover. Free cash remains a luxury.

The industry is aware of this vulnerability.

WTI (NYMEX) Price

End of day Commodity Futures Price Quotes for Crude Oil WTI (NYMEX

OIL (WTI) LATEST PRICE

Trade Date

05/10/2019

Daily High

62.49

Daily Low

61.42

52-week High

76.90

Prev. Close

61.60

52-week Low

42.36

Re: West Texas Intermediate (WTI): We are now short oil from the 65 level. We would look to sell oil on a rally back to resistance at the 65 level.

Looking for next support at 50

A weekly close above 67 would change our short term technical bearish outlook coupled with continued restrictive production seen from Russia, Iran, and Venezuela as well as US fracking estimates not being met. In that case, a movement back towards a test of highs above 73 would be our upside projections.

Saudi output decisions remain the elephant in the room.

Contact Us for more advice; both retail and professionals

Energy Outlook: Uranium

What is Uranium? How Does it Work?

  • Uranium is a very heavy metal which has been used as an abundant source of concentrated energy for 60 years. 
  • Uranium was discovered in 1789 by Martin Klaproth, a German chemist, in the mineral called pitchblende
  • Uranium was apparently formed in supernovas about 6.6 billion years ago. While it is not common in the solar system, today its slow radioactive decay provides the main source of heat inside the Earth, causing convection and continental drift. 
  • Uranium has a melting point of 1132°C. The chemical symbol for uranium is U.

The Uranium Atom

On a scale arranged according to the increasing mass of their nuclei, uranium is one of the heaviest of all the naturally-occurring elements (Hydrogen is the lightest). Uranium is 18.7 times as dense as water. Like other elements, uranium occurs in several slightly differing forms known as 'isotopes'.

The isotope U-235 is important because under certain conditions it can readily be split, yielding a lot of energy. It is therefore said to be 'fissile' and we use the expression 'nuclear fission'.

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Energy from the uranium atom

The nucleus of the U-235 atom comprises 92 protons and 143 neutrons (92 + 143 = 235). When the nucleus of a U-235 atom captures a moving neutron it splits in two (fissions) and releases some energy in the form of heat, also two or three additional neutrons are thrown off. If enough of these expelled neutrons cause the nuclei of other U-235 atoms to split, releasing further neutrons, a fission 'chain reaction' can be achieved. When this happens over and over again, many millions of times, a very large amount of heat is produced from a relatively small amount of uranium.

It is process, in effect "burning" uranium, which occurs in a nuclear reactor. The heat is used to make steam to produce electricity.

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Inside the reactor


Nuclear power stations and fossil-fuelled power stations of similar capacity have many features in common. Both require heat to produce steam to drive turbines and generators. In a nuclear power station, however, the fissioning of uranium atoms replaces the burning of coal or gas. In a nuclear reactor the uranium fuel is assembled in such a way that a controlled fission chain reaction can be achieved. The heat created by splitting the U-235 atoms is then used to make steam which spins a turbine to drive a generator, producing electricity.

The chain reaction that takes place in the core of a nuclear reactor is controlled by rods which absorb neutrons and which can be inserted or withdrawn to set the reactor at the required power level.

The fuel elements are surrounded by a substance called a moderator to slow the speed of the emitted neutrons and thus enable the chain reaction to continue. Water, graphite and heavy water are used as moderators in different types of reactors.

Because of the kind of fuel used (ie the concentration of U-235, see below), if there is a major uncorrected malfunction in a reactor the fuel may overheat and melt, but it cannot explode like a bomb.

A typical 1000 megawatt (MWe) reactor can provide enough electricity for a modern city of one million people.

From uranium ore to reactor fuel 

Uranium ore can be mined by underground or open-cut methods, depending on its depth. After mining, the ore is crushed and ground up. Then it is treated with acid to dissolve the uranium, which is recovered from solution. 

Uranium may also be mined by in situ leaching (ISL), where it is dissolved from a porous underground ore body in situ and pumped to the surface.

The end product of the mining and milling stages, or of ISL, is uranium oxide concentrate (U3O8). This is the form in which uranium is sold.

Before it can be used in a reactor for electricity generation, however, it must undergo a series of processes to produce a useable fuel.

When the uranium fuel has been in the reactor for about three years, the used fuel is removed, stored, and then either reprocessed or disposed of underground.

Who uses nuclear power?

About 11% of the world's electricity is generated from uranium in nuclear reactors. This amounts to over 2500 billion kWh each year, as much as from all sources of electricity worldwide in 1960.

It comes from over 440 nuclear reactors with a total output capacity of about 390,000 megawatts (MWe) operating in 31 countries. Over 60 more reactors are under construction and another 160 are planned.

Belgium, Bulgaria, Czech Republic, Finland, France, Hungary, South Korea, Slovakia, Slovenia, Sweden, Switzerland and Ukraine all get 30% or more of their electricity from nuclear reactors. The USA has about one hundred reactors operating, supplying 20% of its electricity. France gets three quarters of its electricity from uranium.

Over the 60 years that the world has enjoyed the benefits of cleanly-generated electricity from nuclear power, there have been 17,000 reactor-years of operational experience.

Australia's known resources are over 1.6 million tonnes of uranium recoverable at up to US$130/kg U (currently above the market 'spot' price), Kazakhstan's are over 700,000 tonnes of uranium and Canada's and Russia's are over 500,000 tU. Australia's resources in this category are 29% of the world's total, Kazakhstan's are 13%, Canada's and Russia's each 9%. 

Kazakhstan is the world's top uranium producer, followed by Canada and then Australia as the main suppliers of uranium to world markets - now over 60,000 tU per year.

Uranium is sold only to countries which are signatories of the Nuclear Non-Proliferation Treaty (NPT), and which allow international inspection to verify that it is used only for peaceful purposes. 

Other reactors

About 200 small nuclear reactors power some 150 ships, mostly submarines, but ranging from icebreakers to aircraft carriers. These can stay at sea for long periods without having to make refueling stops.

The heat produced by nuclear reactors can also be used directly rather than for generating electricity. In Sweden and Russia, for example, surplus heat is used to heat buildings. Nuclear heat may also be used for a variety of industrial processes such as water desalination. Nuclear desalination is likely to be a major growth area in the next decade.

High-temperature heat from nuclear reactors is likely to be employed in some industrial processes in the future, especially for making hydrogen.

Since the 1990s, due to disarmament, a lot of military uranium has become available for electricity production.

The Big Boom and Bust in Uranium Prices

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An Uranium Stocks Forecast for 2019

We do not cover the uranium market often, but, admittedly, this forgotten stock market segment looks increasingly more attractive. There is bullish momentum brewing in this sector. The segment of uranium stocks in 2019 might be one of the outperformers. In this uranium stocks forecast for 2019 we will look at the underpinning uranium spot price as well as 3 top uranium stocks.

The uranium market is quite cyclical in nature. The strongest months of the year for uranium spot as well as uranium stocks (URA) are the ones around year-end.

One very important remark for our uranium stocks forecast for 2019 is of course the broader stock market. In a bad market scenario all uranium stocks will go down.

Moreover, the uranium spot price is the key driver for uranium stocks. The drivers of the uranium spot price is almost a mystery, this market is quite intransparent.

We have developed a structured method to come to an educated uranium stocks forecast for the remainder of 2019. We do so by looking at the uranium spot price chart, 3 different uranium stocks and seasonality. That’s the way we try to derive our uranium stocks forecast for 2019.

An Uranium Spot Price Forecast for 2019

The chart of the uranium spot price looks very enticing. We will look at both the historical spot price chart as well as the futures chart. The historical chart over 30 years shows a bottoming formation. A rounding bottom which is now in the making for some 3 years is a very powerful bullish pattern.

What we learn from this historical uranium spot price chart is that the downside is very limited while the upside is significant. As always, a recovery does not happen overnight. A recovery is a process, and it first needs a solid base before a powerful bull market can start.

If we zoom in we see this rounding bottom on the 10 year chart. More importantly, there is a breakout in the making right now.

Interestingly, this is a double breakout. On the one hand there is a break above the previous lows (summer 2014) on horizontal support, on the other hand there is a break above this 7 year falling triangle.

This is a powerful signal. The monthly chart below must show at a minimum 3 more monthly closes above $28 in order to qualify as a confirmed breakout.

We believe that uranium’s spot price has room to rise to $40 in 2019 though it may happen gradually.

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3 Top Uranium Stocks Forecast for 2019

As part of our uranium stocks forecast 2019 we look at the long term dominant trends in 3 leading uranium stocks. We have identified one stock per segment: large cap and producer, small cap, junior/explorer. Each of our uranium stocks forecast 2019 forecast gets invalidated once uranium’s spot price goes below $28 for at least 3 consecutive months (monthly closes).

First, in the large cap, Cameco Corp (CCJ), the leading uranium stock globally. It is now moving from its ‘consolidation band’ to one band higher. We believe that, provided that uranium’s spot price continues to trade above $28, Cameco might test $16 in 2019

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Second, in the cap we have selected UEC: Uranium Energy Corp (UEC).

 The fundamentals of Uranium Energy Corp suggest that this company absolutely needs higher uranium prices to survive and become structurally bullish.

This is why:

  • UEC is not generating any revenue right now.
  • There is a $3M loss per quarter.
  • Between 1 and 3 million of new shares are created per quarter.
  • At the end of April there was $12M cash on its balance with a burn rate of $3M per quarter. So by early 2019 there will not be any cash, at the current rate, unless there will be revenue between now and then or a capital raise.

It is clear that UEC is a leveraged play on the uranium spot price. If and once UEC breaks out of its falling channel we may see a quick rise to $4. This may or may not happen in 2019, it will all depend on how uranium’s spot price develops.

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Third, last but not least Fission Uranium (FCUUF) (OTCMKTS) @ $0.38 is an explorer with one project. This is a very high risk play!

Fundamentals have a bullish bias. As seasonal effects support higher prices in the time ahead it is likely to push Fission Uranium higher, outside of its giant triangle pattern. The bullish aspect of this is that a 20 pct increase, which is nothing for a highly volatile stock in a sector like uranium will create a breakout. That’s why we tend to use the analogy of a pressure cooker here for (FCUUF).

If this breakout takes place this year, there is plenty of time to move higher in the coming November 2019 – February 2020 timeframe. An early break-out this year; will likely bring Fission Uranium to the $1.35 area in 2019.”

According to our seasonality chart (for which we have chosen UEC as the barometer) it is clear that the months (November till February) are the most profitable period of the year for uranium stocks.

In other words, if uranium really breaks out, it is likely going to happen soon. Then Uranium stocks will do very well.

If not, though, the real breakout might take place at the end of 2019.

Before you take a position in uranium, you must ask yourself: Is the market confirming a solid breakout?

By far the most important indicator is the spot price of uranium. As seen on below chart there may be a very bullish development underway in the uranium: a successful back-test of the recent breakout. This has to be confirmed.

  • What if the $28.50 level in uranium spot price holds, and the gap to $35 to $38 will be closed? This would be wildly bullish for uranium stocks.
  • What if the $28.50 level in uranium breaks down? This would be bearish, and uranium spot would be eyeing $24.50 a few months later.

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