Correlation Economics: Oil Forecaster Index

zondag 10 mei 2020

Oil Forecaster Index

Current status of energy market.

The oil price (link 2, link 3, link 4 (WCS)) 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.

Make sure to check the uranium price because uranium is a leading indicator for oil.

Make sure to check the GDP outlook from the Atlanta Fed.

Make sure to check the flight statistics (link 2, link 3).

Check the bullish percentage energy index. Alternative link.

Check rig count.

Check the futures curve.

Check the seasonality on oil and gas.

Check natural gas consumption.

Check the forward curve, if we are in backwardation, typically oil/natgas is topping out.

Check the WCS-WTI differential. WCS should close in on WTI due to the Trans Mountain Pipeline going in production in 2024.

Check the average inflation adjusted oil price.

Check the palm oil price, which is a leading indicator for crude oil.

Check that oil open interest (link 2) is rising (leading indicator).

Check shale oil production (which is going bust).

Check global oil production.

Check oil inventories.

Check natural gas inventories.

Oil CAPEX is at decade lows and should support higher oil prices. Watch the oil CAPEX/Sales ratio. Whenever this is below historic average, you are in an oil bull market.