Correlation Economics Backup

 We can already see the future.

Low inventories mean higher prices. 

Current status of energy market. The  oil price  ( link 2 ,  link 3 ) can be predicted based on oil supply and demand numbers. Demand can be correlated to U.S. GDP while supply can be correlated to production. I added the Chinese yuan exchange rate to include Chinese oil demand, which is a large part of oil demand. The same chart below but GDP substituted by credit spreads. The oil price is a leading indicator for rig counts. If you see the oil price (green line) go down, the rig count (blue line) will go down as well. Later on, the oil production (light blue line) will go down. Oil price = Green line Rig counts = Blue line Oil production = Light blue line Macro-economic indicators from the EIA should be monitored. Check the latest news  here . Shale gas production  ( decline rates ) U.S. natural gas storage Robry model EU natural gas storage  ( link 2 ) EU natural gas demand Fair value price of gas EU electricity production by source LNG production  a...

 

Open interest  ( link 2 ) in oil is a leading indicator for the oil price as it tells us whether there is money flowing into the sector or not.  By checking out the Open Interest of various commodities, we can roughly gauge their price trend. As Open Interest increases, more money is moving into the futures contract and vice versa. Open Interest represents the total number of open contracts and volume is the total number of contracts that have changed hands in a one-day trading session. It is important that observe the relationship between open interest and volume. By using open interest, traders are able to forecast the trends and momentum opportunities, and also augur the market timing on trades. According to the theoretical base, rising in volume and open interest reveal the continued movement up or down. In other words, when the volume and open interest decline, the theory perceived that the momentum and movement are decelerating, and the direction of prices will soon rev...

The probability of higher gas is rising. Gas supply has not been resolved.

Oil still has a long way to go up.

Buy the drilling companies.  Oil investment has been very low for a decade, it's time to start drilling. Some drilling fundamentals: