What’s Affecting Oil Prices?
The last year has been an exciting one for oil, to say the least. Starting the year in the high $90s a barrel, today it sits at 66$. There have been many factors that have tied into this story – here is some of the highlights.
US Shale Production is booming, through a combination of horizontal drilling and hydraulic fracturing. Production increased to 9.08 million barrels a day through Nov. 28. Weak Chinese trade data did not help matters.
“Notwithstanding day-to-day movements, the fundamental picture hasn’t really changed, and that is one of supply outstripping demand growth for most of the year,” said Phin Ziebell (senior analyst at National Australia Bank).
As Russian sanctions rev up, Washington has banned imports of high technology oil equipment to Russia and imposed sanctions on Russian oil majors. This has stopped Western firms from supporting exploration and production of shale oil reserves in the Arctic. Russia is the second largest oil exporter, with production hovering around 10.5 million barrels per day. Russia is depending on the development of new reserves to maintain it’s current output.
To make matters worst, a recent report from Morgan Stanley suggests that Brent crude, an international standard, could hit as low as $43 a barrel.
Saudi Arabia, Top producer of oil in the Middle East, blocked OPEC output cut. This shift represents a major shift in the groups policies, and essentially means a battle for market share between OPEC and non-OPEC countries.
OPEC forecast that demand for its oil would drop to 28.9 million barrels a day next year, compared with 29.4 million barrels a day in 2014, the lowest amount in 12 years! Some suggest that recent shifts in OPEC have effectively killed the group.
“The U.S. is producing in a very, very bad manner. Shale oil, I mean it is a disaster from the point of view of climate change and the environment,” Foreign Minister Ramirez, who represents Venezuela at OPEC, said.
Yet as oil prices continue to show weakness, several countries such as India, Indonesia and Turkey stand to gain through leverage of their deficits.
- Published in Blog, Oil and Gas
The Venture Hitting New Lows – Is it Time for a Turnaround Yet?
The S&P/TSX Venture Composite Index dropped -12.81 points today, hitting a 10 year low.
Contrarian investors must be salivating today as oil scraps at the bottom with an 5 year low. Morgan Stanely said that oversupply would most likely peak next year with OPEC deciding not to cut output.
China’s exports rose by 4.7{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce}, down from 10.6{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} in October. While the US economy is doing well, China’s economic growth slowed to 7.3{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} in the last quarter, the lowest in 5 years. We are beginning to see history repeat itself on the venture – after 4 years of dropping, it would not be unusual to expect a turnaround in the shortterm. It might go sideways a bit like back in 1991-92 or 2000-2003, however a pattern emerges – take a look back from 1990 to now on the index.
1991-1992> sideways
93> up
94> down
95-96> up
96-99> down
2000> up
00-03> sideways
03-06> up
06-08> down
08-10> up
10-14> down
See the pattern? There is almost a clear back and forth that happens, and following the history, it looks like we are soon to see an uptrend.
- Published in Blog
China takes Top Spot in Latest IMF Report
It’s official – the US economy is now #2 in the world. If it isn’t obvious already, China took the lead this year.
The International Monetary Fund released it’s latest economic report.
The IMF oversees the international monetary system and monitors the financial and economic policies of its members. It keeps track of economic developments on a national, regional, and global basis, and reports annually.
In terms of real purchasing power, China now represents 16.5{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} of the global economy, whereas the US represents 16.3{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce}. To be fair the is a difference of 0.2{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce}, however this shows the growing economies in Asia. India comes in third at 7.2{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce}.
The last time that the US slid from the first spot was when Ulysses S. Grant was president! In the short term this won’t change much, but the long term implications. Economic power has always been a strong indication of political and military power. Britain, Spain, France, Rome… they all were once on top of the world – but when their economies declined, so did their power and influence.
Will history repeat itself? Only time will tell.
- Published in Blog
The Market at a Glance
S&P/TSX Composite Index rose to 14,754.06, or up 0.92{92d3d6fd85a76c012ea375328005e518e768e12ace6b1722b71965c2a02ea7ce} today. The big shakers were TSX gold, energy and material sectors.
S&P/TSX SmallCap Index returns today, breaking a seven day streak of decline.
Gold prices rose today, as crude oil saw a rally. “The move up in crude prices is giving gold the boost,” said Phil Streible, a senior commodity broker at R.J. O’Brien & Associates. A contrarian analysis of gold-market sentiment suggests however this may be a weak foundation.
- Published in Blog
Press Release: OrganiGram (OGI.V) builds three grow rooms in Moncton
2014-12-01 08:17 ET – News Release –
Mr. Denis Arsenault reports
ORGANIGRAM ANNOUNCES THREE ADDITIONAL GROW ROOMS PASS INSPECTION – INCREASE PRODUCTION
OrganiGram Holdings Inc. has completed, as part of the expansion at its medical marijuana production facility in Moncton, the construction of three additional 72-flowering-light grow rooms. In accordance with the Marihuana for Medical Purposes Regulations, all necessary Health Canada inspections and approvals have been obtained.
The completion of the three new grow rooms will add 1,700 plants to the facility, enabling the company to increase production levels to one million grams (1,000 kilograms) and represents approximately $8-million in revenue per year.
“We are extremely happy to be making this announcement today. The OrganiGram team has been working tirelessly to bring these new grow rooms on-line and fulfill our commitment to MMPR patients,” said Denis Arsenault, chairman and chief executive officer.
Expansion update
Additionally, the company began construction of a further eight grow rooms on Oct. 1, 2014. The construction of these 90-flowering-light rooms is expected to be complete and production to begin in February, 2015. Once completed, this phase of expansion will add 11 grow rooms totalling 936 flowering lights to the current facilities capacity. This expansion will increase the facility’s production to three million grams (3,000 kilograms) and represents approximately $24-million in revenue per year.
We seek Safe Harbor.
© 2014 Canjex Publishing Ltd. All rights reserved.
- Published in Blog
Organigram ( OGI:V) – Why You Should be Looking at Them Now.
Chris Parry has become one of the forefront speakers on the Medical Marijuana space in Canada, covering many of the rise and falls of this space. Recently through his MMPRInvestments, They released a free report covering Organigram (OGI:V).
Chris points out probably the most important aspect when considering which company to get involved with – Organigram’s deal with the Trauma Healing Centers. In the Canadian MM industry, they are the only company currently with a deal that will cater to individuals who have government backed health insurance. This coupled with its organic certification, easy scale capacity and bilingual nature ( Quebec monopoly in the making..?), makes OGI one of the top MM producers. And don’t forget, MM has show great promise for victims of PTSD.
Let that sink in for a second, then go read the full report here
- Published in Blog
The MMPR Investments Report: Organigram (OGI:V)
The medical marijuana space in Canada has been crazy for the last year.
From the sudden emergence of a corporate medicinal cannabis supply system to court cases allowing formerly registered users to continue growing their own product, to the crazy profligation of unregulated dispensaries in Vancouver while other cities shut them down as soon as they appear, the mining-to-marijuana rush, the crazy share price spikes and crashes, the suited brokers shoving through barbed wire fences to do deals with motorcycle club employees, the boardrooms with baggies of samples being passed around… nobody could have foreseen the madness.
But out of madness, eventually, comes sanity. And the Canadian weedspace right now is verging on the sane.
Gone are many of the early share price rockets. Companies like Green and Hill, and Growlife, and Enertopia, and Creative Edge Nutrition, which had market caps as high as when they launched, now scrape bottom. The ticker symbol plays like BUD and THC are nowhere to be seen. And investors that, formerly, played all day, bouncing their cash from play to play depending on what was being promoted, are now butthurt, poorer, and looking for where to go next.
That’s the bottom end.
At the top, some serious wheels are turning. I’ve looked deep into the soul of many of these companies and I like what I see. Canadian medical marijuana is a mess of bureaucratic regulations, to be sure, but that torturous process has effectively allowed the market to be filtered through a sieve that has left only the high quality, the well-funded, the professionally run and the well supported companies standing.
Companies like Bedrocan, the Canadian subsidiary of a Dutch parent that has the monopoly on European medical marijuana and has earned $1m in revenue just reselling imported product from its parent. And Tweed, which two licensed facilities and a big war chest, the first mover in the market that stands tall on its effective marketing campaign and US investor base penetration. And Mettrum, a new player that keeps it cards close to its chest while it quietly connects registered patients to its product. And Supreme, which is marching towards its license with a plan to grow medical marijuana in a massive Ontario based facility, and sell it on the cheap to feed the low end of the market.
These are all fine companies. There are others, earlier in their licensing process, that may add to the roster. But there’s one that, right now, to me, has demonstrated it stands tall.
That company is Organigram.
You’ll find it in the Canadian markets under the ticker V.OGI. In the US, it’s OGRMF.
Why do I like this company? How much do I like this company?
Let’s get into that.
Organigram is not selling more weed than anyone else. It’s not got more name recognition than anyone else. It’s not sitting on a billion square feet of growing space. But it has something REALLY important in Canada, and North America proper.
It has a deal.
That deal is with Trauma Healing Centres (or THC), a group that is opening a series of clinics across Canada aimed at treating people with post-traumatic stress disorder. That means, largely, military veterans and first responders.
The deal promises to bring Organigram as much as $22m over the first two years, and to expand outward from that. But while that’s nice, it’s not the most important thing.
The deal also promises to give Organigram a bankable off-take arrangement upon which it can plan ahead. Instead of fighting for every patient, the THC group will bring the patients to them. But that’s not the most important thing.
The deal will embrace Organigram’s certified organic product (something no other company has), and will take advantage of the company’s truly bilingual structure (something, again, no other company has, and which gifts the company Quebec as a virtual monopoly).But, again, not the most important thing.
The important thing is veterans in Canada have government-backed health insurance, and medical marijuana is an accepted treatment for PTSD.
This means Organigram has a deal that, as a first in North America, will be insurance-backed, to serve a large segment of the population exclusively.
Anxiety disorders, or which PTSD is one of the largest segments, cost the US health system $42.3 billion annually, according to the Sidran Institute. Around half of that is spent on drugs, and those drugs are significantly more expensive – and less effective – and have more side effects – than medicinal cannabis.
Currently, Health Canada puts the potential market for medical marijuana at $1.3b per year in 2022. So if Organigram can be the go-to place for Canadian veterans and first responders to turn to for their PTSD relief, the market radically dwarfs the expected registered medical marijuana user for all other ailments.
This won’t happen tomorrow. It won’t happen next month. But when it happens, when the healing centres open and the veterans groups, which are behind THC, start moving their brothers into that system, Organigram won’t have time to scratch itself for all the business it’ll be handling.
And that’s why the company, right now, is working feverishly to expand. All the money it has raised in previous months, all of it is going to expansion of its present facility – something it can do because it just purchased the building next door and worked with the municipality to merge the two properties into one address. No need for a new MMPR!
I own Organigram stock. I’m not selling. I’m going to have to make that disclosure every time I write about this company for a long time to come because I have no plans to cash in my stake. I’m waiting for dividends, and I’m very happy in my belief dividends will one day flow hard.
There are several great investment options in medical marijuana in Canada. You should seriously consider them and invest where you think your money will be safest and most productive.
For me, that’s Organigram. V.OGI. Get in.
Written by: Chris Parry
NOTE: The author of this report has been paid for its production and dissemination and owns Organigram stock. Please do your own due diligence before making any investment and speak to a licensed professional for investment advice.
- Published in Blog