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How Long Will Gas Stay Around $2 A Gallon?

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In the last few months, gas prices have been wonderfully low.

Economists have a few predictions about the future of gas prices.

Where Are We Now?

The current nationwide average price for a gallon of normal gasoline was $2.27 as of July 13.

Even more astonishing is the fact that for over a quarter of gas retailers in the country, the average price today is below two dollars per gallon.

Last week almost 30,000 gas stations had prices below $2 per gallon, whereas the previous week only 20,000 stations were able to boast such low prices.

Prices Are Breaking The Rules Of Supply And Demand

This low average price is seriously surprising to consumers and economists alike, considering the fact that gas demand has recently hit an annual high in the United States.

The Energy Information Administration is currently forecasting oil consumption to continue its increase steadily.

Their current estimates hover around 130,000 barrels per day.

This would mean an average of 9.29 million barrels of oil a day for every day of 2016.

If their predictions were to come true, this year would have the highest daily average consumption of any previous year on record.

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Causes Of Astonishingly Low Oil Prices

The reasons behind the current record-breaking low prices are varied and can be traced to different players throughout the global oil economy.

But a few likely causes for the low fuel prices seen this month include:

  • The overall influx of crude oil supplies
  • The lack of disruptions to major refineries, which the country has typically been experiencing early on this year
  • Current surplus supply in most fuel inventories in the country, again due to the influx of fuel supply

This summer, the daily average cost of gasoline is a whopping 20% lower than the daily average cost of last summer, according to Gas Buddy.

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 Broader Trends Point Towards Stability

In an interview with MarketWatch, senior analyst Patrick DeHaan noted that this month has seen a consecutive decline in prices each and every day.

Refineries have been keeping up with demand, so there have not been any price spikes due to scarcity this month.

At the beginning of the first week of July, demand was a full 2.9% higher than the same week in 2015.

By the end of the week, it was up 2.9% from the same week last year.

This falls in line with the broader national trend of increased gasoline demand every year.

However, the decrease in prices is somewhat a rarity, especially as the conflict in oil-producing areas continues.

Could Anything Shake The Trend Of Declining Prices In The Near Future?

DeHaan predicts that summer prices will likely remain low.

However, he also mentioned that because hurricane season is rapidly approaching on the east coast, it has the potential to shake things up a bit.

During natural disasters, especially ones with a large impact, oil prices tend to increase dramatically in a short period.

Statisticians and economists at Gas Buddy predict that the average will hopefully be likely to stay somewhere between $2.10 and $2.35.

The EIA marked its prediction at $2.25 per gallon this summer (calculated as from April to September), about 39 cents lower than the average cost last summer.

They estimate that drivers seeking low prices can likely expect the total year average for this year to be $2.12, and in 2017 they predict it will have risen to $2.28 per gallon.

What Do These Low Prices Mean For The Industry And The Environment?

Despite the joy we may feel at having to fork over less cash to fill up our tanks, the low prices aren’t something necessarily to jump for joy over.

In fact, it could mean more trouble for in a few years down the line.

With lower prices, consumption increases.

 This means more traffic on the roads more often, more exhaust emissions (especially problematic in cities that already experience poor air quality), and if trends continue, eventually decreased stocks of oil.

This will lead to higher prices; after all, we can’t change the fact that petroleum is a finite resource.

Planning For An Unpredictable Future 

Even petroleum producers admit that eventually, we will have to reduce our petroleum dependence and invest in more renewable energy sources.

It may be worth considering investing the money you save from low gas prices into energy-saving strategies like installing solar panels on your car.

You will probably need it down the line when volatile gas prices inevitably rise again due to one thing or another.

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Commodities

Latest Update On Oil – Expected to Settle Between $45 and…

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“Oil is going to a new price point because of the revolution in production,” said Bill Perkins, chief investment officer of energy-focused hedge fund firm Skylar Capital Management. Perkins believes the price of crude could fall as low as $45 a barrel. He is personally short, a bet that the price of the commodity will drop. He believes oil will settle between $45 and $80 a barrel in the next year.

“Companies are harnessing amazing new technology to destroy the traditional energy value chain,” Perkins said. “There’s a lot of money to be made on that.” “U.S. energy names remain a significant net exposure for equity long/short managers who added longs and cut shorts after October’s trough,” the report said. “If pressed, one could interpret this positioning as bullish for energy stocks.”

Andurand thinks crude might hit $50 a barrel within the half-moon of 2015 and so rebound to a high of $70 within the fourth quarter. He also said the oil market is oversupplied by between 1.5 and a couple of million barrels per day, given weak demand, low disruptions to produce and enhanced production by nations that do not belong to the Organization of the oil mercantilism Countries.

“OPEC is not the swing producer anymore. U.S. shale oil producers are, but will take more time to react to prices than OPEC—it is a game changer that will lead to more volatile prices and bigger price ranges,” he added.

Morgan Stanley aforesaid the worth would wish to fall as low as $35 or $40 a barrel to prevent production and rebalance provides.

Still, the bank noted that the worth can doubtless rise eventually.

“Oversupply is probably going exaggerated and therefore the market is also content regarding side risks,” the report aforesaid.

Read More at CNBC

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Commodities

Investing in Energy Markets Part 2: Oil, Gas and Energy

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It’s no secret that the energy industry is very profitable, with oil and gas making up 80% of the market.

 

Thus, these two resources attract the most people. They are the best energy investment resources due to high demand and wide range of options. However, with energy scares fresh in our recent memory and the climate change movement greatly affecting energy policy, new alternatives are constantly being sought.

Terror group ISIS may make $3 million a day selling oil

Everything that we do requires some type of energy. As a result, the price of energy affects the going rate for other commodities as well. When the price of oil increases, the price of transporting goods goes up as well.

That is why the cost of milk fluctuates and why your favorite imported coffee beans are more expensive than Folgers. Factors that contribute to these prices include geopolitics and natural disasters, but can never truly be accounted for in full. That is one of the underlying points to understand and accept about energy markets. Something can always go wrong. Typically, it doesn’t, but when it does things can get hairy and fast.

TYPES OF ENERGY SECTORS: That could affect your Household

Nuclear Nuclear power actually produces 1/10th of the world’s power, without emitting carbon. The United States and China have roughly 75% of the world’s nuclear plants with India and Russia also tapping into the market.

“Green” and renewable energy companies You can invest in different companies that place an emphasis on renewable resources by using the stock market. This option is optimal for investors who like the idea of green technology but do not now want to run the risk of investing in developing companies directly. This market has always been tricky from an investment perspective due to volatility. If you have an appetite for risk, however, this is a good place to look.

Modern Energy (solar, wind, geothermal, transportation, efficiency) Modern energy is made up of three major components or categories. They are wind, solar and biomass. The renewable sector is expanding at a rapid rate. We have witnessed a steady employment increase in the energy sector since 2011 with no end in sight. All types of investors and speculators are flocking to the natural resource markets in attempts to get out ahead of the renewable energy trend that could be the way of the future.

Big Oil In 2010, the world market for oil witnessed an incredible increase of 32%, to over $2,100 billion. According to estimations of oil segment professionals, the market’s value will hit $2,683 billion in 2015. The competitiveness of the global market of the crude oil is explained by its limited resources and mankind’s insatiable appetite for growth. This factor should not be disregarded easily. Our desire for more explains the majority of the energy marketplace.

Gas sector The market of natural gas reached $18.5 billion by the end of 2011. Demand for gas has recovered to match and surpass pre-recession levels. The US prices for gas are half of those in Asian countries and the EU. Gas demand decreased 3% in 2009, but at present is on the rise.

Electricity Buying the stock of electricity companies is the preferred way of entering this marketplace. The majority of the participation in electricity markets, however, takes place in the futures markets. Since power companies are constantly projecting and calibrating their loads, the futures market is the only place where investors with this sort of risk profile will feel that they belong.

Coal Many non-coal energy sectors directly depend on the performance of coal because burning coal has been proven to produce enough energy to support high demand. Due to recent regulations in the US by the Environmental Protection Agency, coal has taken a minor hit, but until a massive, institutionalized adoption of newer technology, it is highly unlikely coal will be going anywhere for the foreseeable future. In other words, coal is very much a barometer for this market. Though it is unlikely to happen any time soon, a massive dip in coal production would likely signal the emergence of a new viable energy source.

Hydro Hydropower energy is still very limited but there has been over $75 billion in investments pledged to R&D before the year 2020. There are some companies worth checking into, but for now this is very much a long term play.

Energy Funds These funds are established with companies related to the energy field. Be aware that some energy funds are more successful than others and produce a higher return than others. Often times, the energy funds are established to diversify various portfolios and minimize risk.

Read more on How Natural Resource Distribution affects your wealth

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Commodities

Oil Prices Surge As OPEC Members Agree To Cut Production

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The Organization of the Petroleum Exporting Countries (OPEC) took its first action in years to cut production on Wednesday in hopes of lifting oil prices. How big a cut did the cartel agree to? Will it really make a difference?

OPEC Members Agree To Cut Oil Production

Oil had its biggest day in more than five months as prices rose 5.3 percent. This action came after OPEC members agreed they could limit oil production – in November. While there are a lot of maybes, this is a big step forward for oil. But will it actually work?

While OPEC members agreed at a meeting Wednesday in Algeria that a production cut is needed to lift oil prices, plans for the supply cut won’t be finalized until November. Barrel output will go from 33.25 million barrels per day to 32.5-33 million barrels per day. A lot can go wrong between now and November, but for now investors love the news.

Many analysts, however, are not as optimistic.

This isn’t the first time this year OPEC has tried to cut oil supply. The committee met in April, but talks fell apart when Iran would not join the talks. In addition to that, all the OPEC countries compete against each other and the U.S. for market share. Several OPEC members, Iran, Libya, and Nigeria, all want to increase oil supply. Throw into the mix the political tensions of the group and this agreement seems very delicate.

Yet, there is a positive feeling about “this time”. Members are hoping that things are more conducive to getting a deal done. Many of the largest producers are close to maxing out capacity, so lowering output slightly wouldn’t be too much of a stretch. Additionally, Saudi Arabia and Iran are feeling pressure domestically from the drop in oil prices, and thus be willing to put aside differences to improve their finances.
Wonder why OPEC needs to cut production? Check the news here with CNNMoney!

For now, trading oil is a smart play. Exxon Mobil Corp. (XOM) rose 4.40% on the news. Chevron Corp. (CVX) rose 3.20%. Energy companies and oil shares will go up until november, and then take their cues based on that meeting.

The election is coming the Capitalist gives you the guide to thriving the election year markets. Read it all here!

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