David Pescod on Oil and Uranium
Seems oil is reaching an interim top, and uranium has hit a bottom...
Cheers!
Peter
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david pescod@canaccord on Oil and Uranium...
-------------------- OIL Correction is coming? ------------------------
Today oil hits new highs as a report out of Goldman Sachs forecasts foroil in the second half of the year to be $141 a barrel from $107, whichis one gigantic change in outlook. Which is enormous, but as we look atthe chart on the price of oil, we suggest it is due for a correction. The last time oil inventory numbers were this high
in the U.S., well, you get the drift.
-----------------------------Uranium Recovering soon? -----------------------------
Uranium, which was at one point $133, now is yours for $60 a pound on short-term contracts and $90
for long-term. Which is the bad news. But for those that have seen many uranium stocks lose 50% and 60% for
the blue chips and 80% or more for juniors, maybe we are approaching abottom as many uranium stocks seem to not be ever new lows.
Merrill Lynch has just come out with a report suggesting that the spotprice of uranium is now close to the marginal cost of mine productionand they note that “Uranium’s spot price has fallen 30% in 2008 toU$63/lb as stocked-up utilities defer buying, after US Government saleslast year eased supply-side tightness. We believe the spot price isclose to the marginal cost of mine production of some newer producers,and expect it will stabilize around current levels.” The Merrill Lynchreport is actually quite bullish on nuclear power, suggesting thaturanium’s outlook is robust.
There are an awful lot of people who have watched uranium stocks getabsolutely devastated and they will be glad to know there is a futurefor that sector. Uranium and zinc have been the two commodity areasthat have been lambasted in the markets.
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