Month: April 2014

So far this week GBP/JPY has been range bound between 171.60 and 170.00. The resistance level goes back to February, and this week we have seen multiple rejections off of it. Price action wise, the most notable rejection happened on Thursday, as the daily bar completely engulfed the previous, rejected off the resistance and closed lower.

This bearish price action pattern will put pressure on the support area today, even if low impact reports from BOJ slightly disappointing today. Japan Corporate Goods Price Index fell 0.1%, to 1.7% compared, while it was expected that it would remain at 1.8%; Japan Money Stock was 3.5%, 0.4% lower than the forecast and 0.5% lower than the previous month.

Besides being a large round number, the psychological 170.00 handle also shows a huge support confluence from a technical standpoint:
1. 38.2% Fibonacci Retracement on the 163.86 – 173.56 upswing, located at 169.85;
2. 61.8% Fibonacci Retracement between 167.75 – 173.12 upswing, located at 169.80;
3. 50-Day Simple Moving Average at 169.91;
4. 100-Day Simple Moving Average at 169.76;
5. Triangle support trendline at 170.00;
6. Previous resistance levels from March located at 169.65.

Thursday’s Bearish Engulfing price action pattern has already been activated, yet the large triangle formation break will be confirmed only if price closes below 169.80, preferably even below 169.60. If a breakout does not occur, a bullish pullback towards the 171.60 resistance remains in play, and the range personality will linger for a few more trading sessions.

Resistance levels: 171.58; 173.12; 173.56; 174.81.

Support levels: 169.60-170.00 area; 168.80; 167.57-167.75 area.

*********
Prepared by Alexandru Z., Chief Currency Strategist at Capital Trust Markets

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Source: George S. Mack of The Life Sciences Report (4/10/14)

http://www.thelifesciencesreport.com/pub/na/dont-miss-the-boat-on-big-biotech-catalysts-keith-markey

Keith Markey, veteran analyst and science director of Griffin Securities, tells us the 2014 pipeline calendar is positively glowing with important milestones that could ignite portfolios. In this interview with The Life Sciences Report, Markey talks about four powerful biotech names with exciting early- to late-stage development projects and one medical device and supply company with serious growth potential. Be warned—huge catalysts are on the horizon that investors won’t want to miss.

The Life Sciences Report: We all understand the importance of catalysts in biotech stocks, but sometimes we’re not clear on which are the most powerful. Would you provide us with a general overview of the drug development stages and valuation points as you see them?

Keith Markey: We see a number of valuation-driving points in the drug development process. The first important inflection point is the submission of an investigational new drug (IND) application to the U.S. Food and Drug Administration (FDA), which is the company’s request to initiate clinical trials based on the preclinical research that’s been conducted. The next three valuation inflection points—in chronological order, as well as magnitude of importance—include having Phase 1 data, having Phase 2 data, and having Phase 3 data. At each step along that development pathway, more information is derived about the drug’s safety and efficacy, both of which are equally necessary for winning FDA approval.

Completing a Phase 1 clinical trial successfully, with an acceptable adverse event profile in a fairly small number of healthy patients, is evidence of the potential for demonstrating safety at some later point in time in a larger group of actual patients.

Phase 2 studies are typically designed to gain additional safety information within the target patient population, while also providing an initial indication of the drug’s efficacy. The Phase 3 trial will either make or break the drug and decide whether it will be approved. If efficacy is successfully proven and if the drug still appears safe in a larger patient population, chances are high for an FDA approval.

The next inflection point would be the new drug application (NDA) submission, though this step is not nearly as exciting to the investment community as getting pivotal Phase 3 data. The NDA just means that the company was able to assemble all the necessary cumulative clinical data and provide it to the FDA.

The final inflection point occurs during the FDA’s advisory committee (AdCom) meeting, where a disease-specialty panel votes on the drug. The date for the Prescription Drug User Fee Act (PDUFA) is the FDA’s target date for deciding the drug’s fate.

TLSR: We might think of the AdCom meeting as a huge valuation driver because that’s when the panel votes yes or no on a drug, but in some cases, a positive vote and drug approval might be baked into investor community perception. AdCom meetings can vary greatly as value-creation points, can’t they?

KM: They can, and that’s an interesting point. Some AdCom meetings are held in high regard and considered to be a very important determinant of whether a drug is going to get approved or not. I do recall a number of AdCom meetings that have given rise to a significant increase in a stock’s value, but those are most likely instances in which there has been uncertainty over whether the FDA would approve the drug, and therefore the investment community wasn’t as confident about the drug’s safety and efficacy data. In these cases, the advisory committee’s support of a drug would provide the first true evidence of how the experts are viewing the drug and how it should be used.

TLSR: This makes me think of a name in your active coverage— MannKind Corp. (MNKD:NASDAQ), with its inhalable insulin product Afrezza (human insulin of recombinant DNA origin delivered via Technosphere particles). It had an AdCom meeting on April 1 and the PDUFA date is now set at July 15. Sometimes the FDA doesn’t have an AdCom meeting, but in the case of Afrezza, I’m thinking it was necessary because the agency made MannKind jump through so many hoops during the drug approval process, including extra trials and years of added development. Do you think that’s the FDA’s reason for holding an AdCom meeting? To finally pull all that information together?

KM: Yes. It’s a rather complex drug application. Insulin is a biologic, and we clearly know how it functions, but it’s being delivered attached to a unique particle MannKind calls Technosphere, through a route of administration that is not typical—pulmonary absorption. Also, the inhalation delivery device, called Gen-2 or Dreamboat, is brand new, as it had to be specifically created for this particular drug. I suppose the FDA felt that this AdCom was the best way to be certain that all factors and data were being addressed. And indeed, that was the case—the advisory committee weighed the merits of the drug thoroughly. I think the experts’ near-unanimous support of Afrezza for both type 1 and type 2 diabetes was a strong signal to the FDA in favor of approval.

TLSR: Keith, no one could deny that the approval vote on Afrezza was anything but a positive event. Yet, looking at the relative strength of MannKind shares over the past six months, I get the feeling that some investors are looking at opportunities to sell. What do you think?

KM: I hate to say it, but that attitude certainly exists. There are a number of people who have made a fair amount of money shorting MannKind stock over the years, partly because of the amount of time that it’s taken to develop the drug and take it over the various hurdles of the regulatory process. There are still a number of people out there who are betting against it, simply because they have made a fair amount of money on it in the past, and probably feel that they can do the same again. It’s hard to know exactly where the stock is going to be when the next news breaks, but it’s possible that there could be corrections along the way to commercialization.

TLSR: Your target price on MannKind is $13/share. That’s more than a 100% implied return on this stock. At this point, and given what you’ve just said, are we now looking at MannKind as a market penetration and revenue story?

KM: It depends on how far out you’re looking. I think a couple of things are going to have to take place before we get to a true revenue-and-earnings story. We still have to get FDA approval, and we expect to see MannKind partner with a major drug company to market the product. It will need to be a company with a strong and experienced sales force dedicated to the family/general practitioner (GP) segment of the medical community.

The last time I spoke with Al Mann, MannKind founder and CEO, he said that his goal would be to find a good partner experienced in promoting drugs to the GP. Al knows that most diabetics are going to be treated first in the primary care setting, whether they are type 1 or type 2 diabetics. The more difficult cases will obviously be handed off to endocrinologists, who will be the key opinion leaders on uptake of the drug. For that reason, I think it will be equally crucial for MannKind to have some success penetrating that specialty-clinician market. After finding a marketing partner, it will probably take about six months from approval to launch. So, if we get the approval by July 15, the PDUFA date, that would place the launch in Q4/14 or early 2015.

In that interim, between approval and launch, we may have a relatively quiet period. The two companies—the partner pharma and MannKind—will start to work together while inventory builds. But that kind of work doesn’t really generate any news, and so investors will probably just have to sit tight for the actual revenue-and-earnings story to begin.

TLSR: Back in 2007, Pfizer Inc. (PFE:NYSE) didn’t even last a year with its inhalable insulin product Exubera (recombinant human insulin with particle diameters between1–5mm), which was developed by Nektar Therapeutics (NKTR:NASDAQ). Exubera’s inhalation device was an inconvenient and cumbersome bonglike device that was not really usable in a public place such a restaurant, and Pfizer eventually dumped the product and gave it back to Nektar. Clearly, MannKind’s palm-size Dreamboat inhalation device, designed for Afrezza, is a huge improvement over Exubera’s delivery device. But could Exubera’s failure be an overhang on MannKind’s shares?

KM: To a certain extent, I think it has been an overhang, because when people in the investment community hear “inhalable insulin,” they immediately think of Exubera. It has taken a fair amount of time to educate some investors about the difference. I imagine there’s also an overhang within some of the other major pharmaceutical companies that have watched Afrezza’s development, but remember what happened with Pfizer and Exubera. I don’t know exactly where MannKind is in the partnering process, but I know that it has been talking to multinational corporations and some regional companies in various parts of the world, and it may have had to overcome some reluctance to even discuss Afrezza. We may also see some overhang in the adoption by the medical community. The important thing is, I don’t think that the individual consumer—the diabetic patient—is going to care one iota about what happened with Pfizer and Exubera seven or eight years ago. I imagine, in their eyes, Afrezza offers a distinctly new approach to treating this chronic disease.

TLSR: Back in November, I spoke with Nobel laureate Craig C. Mello, who is a cofounder and member of the scientific advisory board of RXi Pharmaceuticals Corp. (RXII:NASDAQ; RXII:OTCQX). I see that your target price for RXi is $13.50/share, which would give investors more than a double from current levels. What is your growth theory for RXi?

KM: RXi has some very important valuation-driving events in progress, including a couple of clinical trials currently underway. One is for use of its connective tissue growth factor (CTGF) gene-targeting agent, RXI-109 (antisense oligonucleotide inhibitor of connective tissue growth factor [CTGF/CCN2] mRNA). RXI-109 is a small-interfering RNA (siRNA) molecule being tested as an adjunct to plastic surgery of the lower abdomen for scar revision, which will be administered at the time of the surgery. These patients are women who have had a hysterectomy or Cesarean section or abdominoplasty surgery that left a transverse scar of 11 cm in length or more. The other application of RXI-109 that’s in clinical trials involves surgical revision of keloids, another type of hypertrophic scar, but rather different than the one that normally would occur after a surgical procedure.

TLSR: These trials are designed so that each patient acts as her own control with half the hypertrophic scar injected in the abdominal scar revision field, or just one ear injected in the case of a keloid excision. It’s a sure way of eliminating age and genetic factors in a patient population and getting a true read on the efficacy of the drug. Was this design a top-management decision?

KM: Yes, it was. Geert Cauwenbergh, CEO of RXi, has a background with Johnson & Johnson (JNJ:NYSE) as head of research and development, and he worked a great deal in dermatology, so he’s clearly the right person for this particular task. Another smart decision will eliminate a drug-delivery problem we normally see with siRNA molecules when they are used systemically—simply getting these drugs to the right place is usually a very big hurdle. However, RXI-109 is injected locally and visibly into the scar revision field exactly where you want it to act. RXI-109 is designed with the company’s self-delivering technology specifically for rapid uptake into cells. It gets into the tissues you want and the cells comprising those tissues take up the drug. This particular approach eliminates that delivery issue entirely.

TLSR: In one of your recent notes, you made a very perceptive comment that the keloid trial added risk to the stock. When keloids are excised, they often return with a vengeance, because they’re a result of a genetic predisposition, whereas post-surgical scarring is a more normal phenomenon. If I were an investor in RXi, I would just as soon have the company not do this keloid trial until it got good proof of concept in the abdominal hypertrophic scar formation study. Am I being too cautious?

KM: The keloid indication is somewhat riskier to go after, but the size of the market and the fact that there really isn’t a suitable approach for treating keloids makes it an attractive opportunity. This keloid trial is not an enormous investment because there are only perhaps 16 people in this study, while there are about 22 million (22M) people in the U.S. with keloids. That’s an enormous population with no opportunity to seek relief from the condition. This treatment has tremendous potential for the company.

The Approval Process in Action (infographic)

Furthermore, the hypertrophic scar formation that arises post-hysterectomy is a very low-risk investment of time and money. The keloid indication is worth pursuing in this Phase 2 clinical trial, because the Phase 1 trials already demonstrated that the drug actually has an effect on dampening scar formation. I believe the reduction or prevention of abdominal scarring with the anti-CTGF drug RXI-109 is already pretty much proven.

TLSR: We should receive a data readout on these 16 patients sometime in Q2/14 or Q3/14. Is this a value-driving catalyst?

KM: Absolutely. But I think we’ll see the data from the hypertrophic scar formation trial sooner than we will the keloid indication.

TLSR: Are there other programs in the RXi pipeline that you find interesting?

KM: The company has a different formulation of RXI-109 that will be used for ophthalmic purposes, and is planning to start a trial in proliferative vitreoretinopathy in Q4/14. The standard treatment today is a vitreous surgical procedure and retinal attachment, but patients suffer loss of vision and retinal detachment commonly recurs, so this new treatment would definitely be merited. This indication is not being pursued just yet because RXi is still small and has limited resources, so it wants to keep its focus on the dermatological applications.

I would mention that the ophthalmic area actually has a larger portfolio of products now because of a deal RXi made with OPKO Health Inc. (OPK:NYSE) in March 2013, when it in-licensed all of OPKO’s RNA interference (RNAi)-related patents, which gives RXi a couple of other opportunities to pursue in the field of ophthalmology.

TLSR: Keith, you also follow Intrexon Corp. (XON:NYSE). The company came up in my recent conversation with JMP Securities Senior Analyst Michael King regarding OvaScience (OVAS:NASDAQ). Intrexon seems to partner or collaborate with other companies in one way or another. Could you tell me why you like it?

KM: Yes, Intrexon is the leader in synthetic biology and has been expanding its portfolio of technologies and capabilities through a couple of recent acquisitions. One that I’ve written about recently is the very important acquisition of Medistem Inc. (MEDS:OTC), a deal that closed on March 7. Medistem was developing endometrial regenerative cells for various clinical applications, and Intrexon saw something intriguing in the platform that would probably have broader uses. These specific stem cells don’t survive for very long in the human body; they don’t implant or durably engraft. Intrexon sees this as a unique opportunity to deliver new therapeutic molecules by creating new genes and inserting them into cells to produce a living biotherapeutic agent that expresses specific proteins. It could be a cytokine or a monoclonal antibody designed through a genetic engineering process. You could create a gene for a particular purpose, such as a specific cancer or an autoimmune disease.

TLSR: Before its $26M acquisition, Medistem had a market valuation in the mid-single digits—roughly a $6M market cap. Investors got a nice bump from this deal, for which they received cash and Intrexon stock. From what you say, it seems there was a tremendous amount of value languishing with Medistem’s cells prior to this acquisition. Is this Intrexon’s basic business model—adding value to other platforms?

KM: I think you hit the nail on the head. Because these endometrial regenerative cells don’t engraft in the human body, Medistem’s original thought of developing them as therapies just didn’t meet the objective. The question then became, “Well, what are they good for?” Without Intrexon having shown an interest in using the endometrial stem cells as delivery agents of synthetic biological products, Medistem probably would have fallen by the wayside entirely.

I think this was a great acquisition for both the Intrexon investors and the Medistem shareholders. Medistem investors should be able to reap some very nice rewards from the acquisition.

TLSR: Intrexon has a solid mid-cap valuation of $2.2 billion ($2.2B), and you recently raised your target price from $36/share to $40/share, which is quite significant in that it represents nearly a $300M increase in market valuation. Did you hike your target because of this Medistem acquisition?

KM: The acquisition was the driving force behind the target price increase. We don’t know exactly what the first two or three applications are going to be as a result of these stem cells and Intrexon’s synthetic biology platform, but I think the $4/share hike is really just an acknowledgement that the acquisition adds value to the company. Investors need to understand that this is not just a bolt-on acquisition—it’s going to be very important for the future of this company.

TLSR: I notice you follow Synthetic Biologics Inc. (SYN:NYSE.MKT), which is also partnered with Intrexon.

KM: The Synthetic Biologics/Intrexon partnership includes a couple of projects involving monoclonal antibodies. Synthetic Biologics is an interesting company. It’s making some progress in developing SYN-005, an antibody that will knock out whooping cough, or pertussis, and the toxin that is produced by Bordetella pertussis. This childhood disease has been lost in the mix of infectious diseases that children encounter, largely because there have been treatments for pertussis in the past. The treatments worked for a couple of decades, but the lack of herd immunity due to waning interest in immunization and the development of mutated, multidrug-resistant strains of B. pertussis has allowed this disease to return to a point where it requires some attention.

The company also has a monoclonal antibody, SYN-001, that targets hospital-acquired infections caused by Acinetobacter baumannii, which is in the discovery phase. With these new monoclonal antibodies, which Synthetic Biologics is producing in collaboration with Intrexon, there is going to be an opportunity to address these infections in a new fashion, by not only knocking out the bacterium but also removing the toxins, which can linger in the body for days after the bacterium that produced it has been killed.

TLSR: My understanding is that Synthetic Biologics initiated IND-enabling studies for SYN-005 to address pertussis recently. What is the stage of that drug’s development?

KM: The company is conducting a confirmatory large animal study that should report topline results in the current quarter. Assuming all goes well, the company will likely submit an IND in the not-too-distant future.

TLSR: The collaboration with Intrexon is interesting, but isn’t Trimesta (oral estriol) Synthetic Biologics’ primary driver right now? I notice that it’s already in Phase 2 studies for multiple sclerosis (MS).

KM: Trimesta’s trial is a near-term catalyst that everybody is getting excited about. Initially, Rhonda Voskuhl, an insightful neurologist at UCLA, noticed that when her patients with MS became pregnant, their symptoms diminished as the pregnancy progressed. She realized that something related to the pregnancy was having an effect on the disease activity, so she began a thorough investigation to identify what the potential agents were that could be responsible for that effect. What she found was the hormone estriol, which occurs only in pregnant women. Once pregnancy is initiated, estriol levels begin to rise from a relatively low level, and as the pregnancy progresses, estriol reaches a peak. After the baby is delivered, the hormone level falls and MS activity resumes pretty much where it left off.

This led Synthetic Biologics to develop Trimesta, which allows for oral administration of estriol to MS patients. Dr. Voskuhl will report the results from a very large Phase 2 clinical trial on April 29–30 at the annual American Academy of Neurology meeting in Philadelphia. If the data looks good, the drug would undoubtedly be out-licensed to a large pharma, providing Synthetic Biologics with a nondilutive source of capital.

TLSR: Is there another name you want to discuss?

KM: Unilife Corp. (UNIS:NASDAQ) is an interesting story that I started to follow about five years ago, when it was trading only in Australia. The company came to the U.S. to get closer to its primary customer, the pharmaceutical industry. It has developed a number of different drug delivery devices, all of which are patented. The company markets to pharmaceutical companies, which can utilize Unilife’s delivery devices and have the drugs ready for use by the patients themselves or their caregivers, physicians or nurses.

Over these last five years, Unilife has done a number of capital raises, most recently securing a $60M debt financing through a rather well-respected asset management company called OrbiMed. The terms of the deal include a $40M initial payment and two additional $10M tranches that will be available at the end of this year and at the end of 2015, assuming Unilife chooses to take them.

TLSR: What will Unilife use this capital for?

KM: The company is setting up new clean rooms for four high-speed production lines for its syringes. It’s completed deals with Sanofi SA (SNY:NYSE) and a generic drug company based in Jordan called Hikma Pharmaceuticals Plc (HIK:LSE), which sells most of its products in Europe. Unilife has also entered into supply agreements with Novartis AG (NVS:NYSE) for a targeted organ delivery system, and AstraZeneca Plc (AZN:NYSE) MedImmune subsidiary for a wearable drug pump for a variety of therapies.

TLSR: Keith, a $60M financing for a company with a $345M market cap makes me curious about how big these pharma deals are. Do you know the magnitude of these deals?

KM: Hikma will be using a minimum of 150M syringes/year by the time it’s three to four years into its contract with Unilife. Sanofi is going to have a minimum purchase order of 175M syringes/year, again within three to four years after shipping commences. All this additional production capacity is going to be used primarily for those two customers.

When I spoke with the Unilife people, I was reminded that Sanofi’s anticoagulant Lovenox (enoxaparin sodium injection) is already selling 400–450M doses/year in the U.S. alone, so four high-speed production lines producing about 200M syringes/year are actually indicative of the business volumes the company needs to be ready for in the next couple of years. The idea is to get them installed and running now in anticipation of that point in time. I don’t think anybody else has picked up on this growth story yet.

TLSR: OrbiMed had to perform deep diligence on this deal for the 10.25% per year it will earn over six years. It makes Unilife look derisked. Is there a growth component to this deal for OrbiMed?

KM: I have to agree with you about Unilife being derisked. And yes, there is a small growth component to the terms of the deal. OrbiMed will get a royalty rate starting at 2.75%, which will then decline as sales of the syringes and devices ramp up. This caps the overall royalty payments. I think this deal is indicative of just how Orbimed sees the growth opportunity in Unilife.

TLSR: Thanks so much for your time, Keith. I’ve enjoyed this very much.

KM: Thank you very much. I’ve enjoyed it, too, and look forward to our next exchange.

Keith Markey has been an equities analyst for more than 25 years, specializing in the biotechnology, pharmaceutical, medical device and research tools sectors. He is currently the science director for Griffin Securities Inc., an investment bank, where he follows emerging healthcare companies with novel technologies. He also works with privately owned companies, helping them restructure their operations, license products under development or near commercialization and raise funds from venture capital and high net-worth investors. In addition, Markey serves on the board of directors of DS Healthcare Group, which specializes in products that address hair loss. Previously, he held various managerial positions in the Research Department of Value Line Inc., publisher of the Value Line Investment Survey and Value Line Select. Markey began his career as a biochemist, working in the fields of endocrinology and neuroscience at New York University Medical School and Weill Cornell Medical College. His research, which involved several international collaborations and resulted in more than 30 scientific publications, contributed to the understanding of regulatory biochemistry of the nervous system and stem cell plasticity. Markey received his doctorate in neurochemistry from the University of Connecticut and a master’s degree in business administration and finance from the Leonard N. Stern School of Business at New York University.

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DISCLOSURE:

1) George S. Mack conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and provides services to Streetwise Reports as an independent contractor. He owns, or his family owns, shares of the following companies mentioned in this interview: None.

2) The following companies mentioned in the interview are sponsors of Streetwise Reports: RXi Pharmaceuticals Corp. and OPKO Health Inc. Streetwise Reports does not accept stock in exchange for its services.

3) Keith Markey: I own, or members of my family own, shares of the following companies mentioned in this interview: MannKind Corp. and Unilife Corp. Within the past 12 months, Griffin Securities Inc. has received compensation for investment banking and/or noninvestment banking services from the following companies mentioned in this interview: MannKind Corp., RXi Pharmaceuticals Corp., Synthetic Biologics Inc., Intrexon Corp. and Medistem Inc. The following companies mentioned in this interview are either currently, or within the past 12 months have been, clients of Griffin Securities Inc. with services consisting of investment banking and/or noninvestment banking services: RXi Pharmaceuticals Corp., Synthetic Biologics Inc., Intrexon Corp. and Medistem Inc. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.

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Source: JT Long of The Energy Report (4/10/14)

http://www.theenergyreport.com/pub/na/russia-invaded-crimea-and-these-us-energy-companies-made-a-killing-stansberry-researchs-matt-badiali-shares-o-g-investing-strategies

Don’t put all your investments in one stock, warns S&A Resource Report Editor Matt Badiali. In this interview with The Energy Report, he shares a basket of companies that are extracting higher margins with ever-evolving shale drilling methods. Find out about his top tenbagger opportunities at home, in the so-called new science and factory shales, as well as his favorites in the far reaches of Kurdistan, where an eventual takeover draft looks likely.
The Energy Report: In a recent Daily Resource Update, you wrote a piece called, “Here’s How Russia’s Invasion of Crimea Could Benefit Some U.S. Oil Companies,” and it wasn’t the oil producing companies I assumed from the headline. Tell us, what companies could benefit.

Matt Badiali: The companies that can refine crude oil here in the U.S., put it on ships and send it abroad are the ones benefitting from the spread between Brent crude and cheap domestic West Texas Intermediate prices. I was actually surprised with the results of this research, too. Giant companies like Exxon Mobil Corp. (XOM:NYSE) and Chevron Corp. (CVX:NYSE) had record years for their refining arms.

Refining is a terrible business. It’s notorious for single-digit profit margins. The price of oil fluctuates globally, but the price the refiners can sell it for in the U.S. is limited by consumers. Back in 2008, when the price of oil hit $140/barrel ($140/bbl), the price of gasoline increased, but it certainly didn’t go up in the same magnitude as the price of oil.

Since exporting raw crude from the U.S. is illegal, refined product is leaving the country at record levels. The Energy Information Administration (EIA) has tracked export data since the early 1980s. We are orders of magnitude higher today in export volume than we have ever been. It’s going to Mexico, it’s going to Canada, it’s going to South America, it’s going to Asia. We’re putting it on ships in Houston and sending it everywhere. These refiners are making a ton of money.

TER: Also, didn’t the U.S., for the first time in a long time, sell crude oil from the strategic reserve as a way to punish Russia?

MB: That was a warning shot. Russia’s economy is based on energy sales. It sells natural gas and oil to Europe and it is starting to develop a bigger sales arm to China. If you can undercut Russia’s oil price with higher-quality crude oil, then it really hurts Russia economically. That’s what broke the U.S.S.R. in 1991. Back then it took Saudi Arabian involvement. This recent strategic reserve sale increased the supply on the market, thereby lowering the price, which threatened Russia and made refiners at home even more profitable.

TER: Do the actions in Ukraine have an impact on European oil and gas companies?

MB: There is a fear premium built into Brent crude, and producers like the Italian oil company, Eni S.p.A. (E:NYSE) will benefit from that. However, Europe’s refineries, which are paying the significantly higher price of Brent, are losing their profit margins. That is why companies like BP Plc (BP:NYSE; BP:LSE),Royal Dutch Shell Plc (RDS.A:NYSE; RDS.B:NYSE) and Total S.A. (TOT:NYSE) are shedding European refineries.

Total is in big trouble with a couple of refineries in France. Repsol-YPF S.A. (REPYY:OTCPK), the big Spanish oil company, has invested billions of dollars in retrofitting older refineries and it’s making about $1/bbl. It will take a long time to pay off that investment at that rate. So it’s kind of a mixed bag right now.

TER: Back in the U.S., we’re coming off one of the coldest winters most people in the Northeast can remember. Is demand for natural gas going to bring the price back up long term or is $6 per thousand cubic feet (Mcf) a temporary blip?

MB: It is a temporary blip. The price spike is due to a transportation problem. We just don’t have the right plumbing in place. There are not enough pipes to get the natural gas to the Northeast. And we did have a record drawdown of natural gas from storage. But there is too much natural gas for the prices to stay high.

If the natural gas price held at $6/Mcf, supply would skyrocket as well. There would be a mass mobilization of drill rigs into places like the Fayetteville Shale, the Haynesville Shale, the Barnett Shale and the western part of the Eagle Ford Shale. It would be like printing money at those prices, but at $4.50/Mcf that natural gas isn’t economic. There is an enormous amount of natural gas waiting to be tapped.

TER: What is your estimate for the price of natural gas for the rest of 2014?

MB: I’ve seen some pretty smart people putting their estimates around $4–4.25/Mcf for the average for this year, maybe a little higher because of that $6 hit we took early. But I suspect that you’re going to see prices fall substantially into the summer.

Natural gas and coal are competitors because of electricity. Energy breaks down to fuel energy—which is usually oil—and power plant fuel, the stuff that powers our electrical grid—that means coal and natural gas. When natural gas was really cheap, around $2/Mcf, many power plants switched to natural gas.

The new Environmental Protection Agency (EPA) pollution controls on coal plants also sped up decommissioning of old coal power plants. That decrease in demand drove the coal price down. Then when natural gas prices rose again, the plants that could switch, went back to coal. It is a delicate dance between supply and demand for these two fuels.

TER: The shale plays you mentioned earlier are not all producing the same thing. Some are oilier than others, some more advanced. How does an investor gain exposure to projects in the Bakken and Eagle Ford differently than the new science shales in the Tuscaloosa, Utica, New Albany or Cline?

MB: When George Mitchell first started experimenting with cracking shale in Fort Worth Texas, the target was natural gas. At that time, natural gas prices had spiked to more than $14/Mcf. The thin layers of shale rock he was observing weren’t thick enough to hold a conventional well. He started exploring methods for drilling horizontally and opening up those rocks.

Fast-forward over 20 years and we know a whole lot more about shale and how to make it produce.

Each shale requires a slightly different approach depending on the geology. This is the science stage of shale fracking. The Bakken Shale up in North Dakota is well past that stage. Companies like Continental Resources Inc. (CLR:NYSE) went through the science part of that shale in the mid-2000s. Today there are some really interesting new shales, including the Tuscaloosa Marine Shale in Louisiana, the Cline in West Texas and the Utica in Ohio. They are all in the science stage.

Once operators understand how deep and in what direction to put the wells for the best yields, they go into the development stage. This stage is all about making the best well at the cheapest cost. They experiment with fracking. Back in the 1990s, they might have divided the well into two stages. Now drillers do 30 or more stages.

As the operators figure these techniques out, production rises. This is when you see a massive increase in production. The Eagle Ford is just finishing up the development stage. It is moving into the factory stage.

During the factory stage, companies drill three, four, five wells from the same location, going out like bird feet. Or they drill them in parallel. Shale wells can be drilled very close together (called downspacing) by this point. That’s where the Bakken is now. The Bakken is an oil and gas factory. You’re seeing dramatic increases year after year in oil and gas production in North Dakota.

TER: Are the improvements in the development stage and increasing the number of frack stages helping with the decline rate problem?

MB: Absolutely. The decline rate in an oil well is a natural progression. A conventional oil well in sandstone is like a 2-liter bottle of soda. When you shake it and poke a hole in the side of it, cola or, in this case, oil gushes out because of the natural pressure in the rock. As that pressure declines, the production of the well does too. That’s decline rate.

In shale wells, the decline rate is much steeper than in conventional oil wells. Analysts that don’t understand shale use that data to predict a bad end for the shale revolution. However, that’s wrong. And the reason is that the decline rate of a single well doesn’t matter. . .it’s the number of wells we can drill in shale that matters.

Let me explain the difference: Conventional oil fields are geologic anomalies. That’s why it was getting harder and harder to find them. A conventional oil field is made up of three things. You have to have a source, which is the shale.

You have to have the reservoir rock. It has to have something like sand grains in it to hold the thing open with lots of space to allow the oil and gas to get in there. That is called permeability and porosity. That’s what allows you to put a well in and suck the liquid out.

Then you have to have a seal, something on top to keep the oil and gas trapped. A good example would be throwing a handful of Dixie cups in the air. The ones that land open side down are conventional oil fields. These perfect situations aren’t common. Giant ones are incredibly rare.

On the other hand, shale is like the carpet under the cups. It is the source rock, so it is full of oil and gas already. It covers an enormous area, much larger than the area of the conventional oil fields. That’s what’s so critical. The volume of oil and gas in shale is much larger than in the conventional fields.

That’s why individual well results don’t matter. Because the amount of oil available in shale is an order of magnitude larger than what was trapped in the conventional oil fields. And we’re just starting to crack these rocks.

The Eagle Ford Shale was the source of oil for the largest oil field in the lower 48, and it still has billions of barrels of oil in it. That’s what’s exciting. Most investors just don’t realize how gigantic shale fields are. We’re just getting good at making them produce oil right now.

When shales get to the factory stage, companies maximize the amount of oil and gas coming out of the ground and minimize the cost to do it. I’m a huge fan of this.

TER: Is there still money to be made in the Bakken and the Eagle Ford?

MB: There’s absolutely money to be made. I like to find small companies doing something different in those established shale areas. One example is Penn Virginia Corp. (PVA:NYSE) in the Eagle Ford Shale. This is a company that is pushing the boundaries of what we considered the Eagle Ford to be. As the price of land in the heart of the shale play got more expensive, some companies moved to the periphery. That’s where they can get a big position without spending a lot of money. Many of these smaller explorers do great work and take what they’ve learned from the heart of the play and expand it. That’s what Penn Virginia did.

By October of 2013, the Eagle Ford was an old story in the eyes of most investors, and Penn Virginia was a $6.73 stock. It saw an opportunity to move into the area, changed its business model, sold off assets and focused on the Eagle Ford. Shares are over $17 today. George Soros is an owner, and he significantly increased his position in the company. There is a Buy target on this from some analysts, up to $25/share. So, yes, there is absolutely still opportunity in the old shales.

Companies like Continental Resources kicked off the Bakken, but you don’t buy them expecting to make 150%. I want to find the next Continental. I want to buy the billion-dollar company that goes to $23B.

TER: Where are you looking for the next Penn Virginia?

MB: I think the next big shale plays are probably the Tuscaloosa Marine Shale, the Utica Shale or the Cline Shale. We’re digging very hard into companies working on these.

However, I like several companies that work multiple shales right now. Sanchez Energy Corp. (SN:NYSE) is a peripheral Eagle Ford player, but it’s also in the Tuscaloosa Marine Shale. It’s a small cap run by a really smart management team. It’s a $1.3B market cap. This is a stock that I think has that potential.

Another one I really like in the Eagle Ford, Marcellus, Utica and Niobrara in Northeastern Colorado isCarrizo Oil & Gas Inc. (CRZO:NASDAQ). It’s the same thing—small cap, moving into the new shales and with a lot of upside potential.

TER: What puts a company on your radar? Are you looking at number of wells drilling? Success rate? ROI?

MB: I look at the rocks. I read a lot of industry reports about well production. . .who’s drilling where. . .whose well produced the best. It’s dry as a bone, but I love this stuff.

These companies can make individual investors rich. I used to get excited about junior mining companies, and I still do to some extent. But small oil and gas companies are actually companies with revenue and earnings. You can evaluate the business as well as the rocks.

Even more important, these companies have to maintain bank loans. It’s very expensive to drill shale wells, but they end up with long-term cash flow worth many times the initial investment. That bank scrutiny gives investors an extra layer of due diligence because the banks want to make sure that their loans get paid back.

TER: Are there any rocks and well-run businesses in the Cline that you like?

MB: There are some interesting companies working not just in the Cline, but also in the Eastern Permian Basin. This is the area under Midland/Odessa, Texas.

If you ever want to find the flattest, driest, dullest part of the world, go there. No offense to all my friends out there from Midland, but this is the place that you’re most likely to be trapped by a herd of tumbleweeds. However, it is a great new shale opportunity. It’s still early, in the science stage.

There are a few companies I like in that area. Laredo Petroleum (LPI:NYSE) and Callon Petroleum (CPE:NYSE) are two little guys. These are small caps that have a lot of potential, like the ones I was talking about in the Eagle Ford. The problem with science shale is that the drillers are still figuring it out. That means expenses are high and the drilling is slow.

Investors have to adjust their mindset. I don’t think either of these companies is going to run up 150% in six months. I do see them both with tenbagger potential over a few years, and I could certainly see the potential to double our money in the next 12–24 months.

TER: You haven’t just been wandering around the beautiful scenery in Texas. You’ve also been traveling the world. The last time we talked, you shared some insights from your visit to Kurdistan. Have you been watching developments since you left? Are you more or less optimistic than three months ago that oil will again flow freely from the area? I understand there were some problems with pipelines.

MB: Yes, there are still problems with pipelines and politics. I am still very excited about Kurdistan, but you can’t quantify the politics. With major oil companies and the big, influential players in Turkey involved, I still think a pipeline from Northern Kurdistan in Iraq to Turkey is inevitable. There is a dispute with Baghdad about how and who gets paid.

I warned my readers that this was not a short-term speculation. It takes a long time. Your investment horizon here is 18–24 months, but I think it’s going to be worth it. Right now, several juniors have the ability to produce oil in the region, but there is no outlet to get to market. The physical pipe is there; it’s a political roadblock. So all we can do is wait.

Exxon Mobil is already in a partnership to build a second pipeline to get the oil out as soon as the political troubles are over. Once we see oil flowing out of the region, I suspect that the major oil companies are going to do an NFL-style draft on the juniors in the area. They’re going to roll them up. All that oil will end up in the hands of just a couple of majors, and that will be that.

TER: One of the companies you gave us an overview on was WesternZagros Resources Ltd. (WZR:TSX.V). Since then, it has announced it received a declaration of commerciality by the regional government. Would that make it higher up in the draft?

MB: Absolutely. It found oil, vetted it and now has a permit to produce it. That pushes it up into the No. 1, No. 2 draft pick area. However, I warn people not to invest in just one company.

At a recent Stansberry & Associates alliance conference in Singapore, I singled out five of these companies I felt like were good speculations and whose rewards more than offset our risk. I presented a basket to diversify risk because these kinds of companies have far more risk, be it political, technical or corporate.

I told those folks that out of the five stocks, three things will happen. First, something bad and unexpected will happen to one of these companies. One will absolutely blow us away by exceeding our expectations. And the other three are going to do really well.

A couple of weeks ago, one of the companies fell out of bed, and I have to tell you, I was shocked. The company was Gulf Keystone Petroleum Ltd. (GKP:LSE). It is the operator of the Shaikan field, which is just an enormous discovery. Shaikan’s wells flow 10 thousand barrels per day (10 Mbpd). This is a huge field.

However, an engineering firm audited the field and came back with a lower reserve number than Gulf Keystone had been telling people. It was at the low end of its range. The stock was killed. We hit our trailing stop and sold.

This is not a bad company. Shaikan is a fantastic oil field. However, it was all about investor expectation. Investors expected a bigger reserve number. The company still has around 20 wells left to drill in that field, which will expand the reserves from where they are now. I still think it is a good buy. It’s probably a better buy now that it’s significantly cheaper.

TER: Do you want to give us another name to fill out our basket?

MB: Sure, Oryx Petroleum Corp. (OXC:TSE) is run by a Swiss billionaire, Jean Claude Gandur, who has been very active for years in Kurdistan. He’s an interesting character. He names his companies after obscure African antelope.

His last venture, Addax, sold to Sinopec Shanghai Petrochemical Company Ltd. (SHI:NYSE) in 2009. My readers made money on that deal, so we were very interested in this one.

Oryx has an oil field named Demir Dagh. Its projected recoverable oil from this is about 250 million barrels (250 MMbbl), and its projected production once it gets the wells in by 2015 is about 25 Mbpd. It is definitely one of the draft choices.

When I wrote about this company, it had plenty of cash, no debt, and it’s still drilling. It’s supposed to be in production sometime this summer, and it has three other targets that it will be drilling this year. We’re waiting on drill results. It takes a long time to drill holes in this part of the world because the equipment is just not as good. If you break a drill rod or a bit in Kurdistan, it takes a long time to airfreight one of those suckers from Houston.

TER: Any final advice for our readers?

MB: You’re going to hear a lot of negative information about shale. It’s new. It’s different. I see a lot of negative sentiment. People are trying to poke holes in the process. All you have to do to reassure yourself that you’re investing in the right place is go to the oil production chart on the EIA website. Take a look at the amount of oil that we’re producing today versus the amount of oil we were producing in 2005. Our ability to crack shale is the equivalent of the creation of the Internet for energy. It’s that big a deal. Those folks who embrace it and get on board have the potential to make a lot of money.

TER: Thank you for your time Matt.

MB: Thank you.

Matt Badiali is the editor of the S&A Resource Report, a monthly investment advisory that focuses on natural resources, including silver, uranium, copper, natural gas, oil, water and gold. He is a regular contributor to Growth Stock Wire, a free pre-market briefing on the day’s most profitable trading opportunities. Badiali has experience as a hydrologist, geologist and consultant to the oil industry. He holds a Master’s degree in geology from Florida Atlantic University.

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Find out about 14 Elliott wave trading insights

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Jeffrey also discusses corrective patterns, including the triangle formation. Here’s an edited excerpt:

Triangles are probably the easiest corrective wave pattern to identify, because prices simply trade sideways during these periods. [The graphic below] shows the different shapes triangles can take.

Triangles offer an important piece of forecasting information — they only occur just prior to the final wave of a sequence. This is why triangles are strictly limited to the wave four, B or X positions. In other words, if you run into a triangle, you know the train is coming into the station.

Jeffrey goes on to provide three real-world examples of the triangle price pattern. Here’s one of them with his accompanying commentary.

[The chart above] shows a slight variation of a contracting triangle, called a running triangle. A running triangle occurs when wave B makes a new extreme beyond the origin of wave A. This type of corrective wave pattern occurs frequently in commodities.

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By Dennis Miller

The toy trap: we all have friends who’ve fallen in. I received a wave of emails after publishing Debt: The Last Social Taboo?, all sharing similar sad stories. Author Dave Ramsey summed up the problem best: “We buy things we don’t need with money we don’t have to impress people we don’t like.”

Malcolm Forbes, lover of all-things extravagant, likely originated the phrase “He who dies with the most toys wins.” Few of us could ever afford Forbes’ Fabergé egg collection or the ostentatious parties he threw, but many a retiree or near-retiree has overspent on cars, boats, homes, and a surgically enhanced trophy wife or two.

My wife Jo tells me this isn’t just a “guy thing” either. She has friends with two or three closets filled with designer clothes. We have one friend who’s been retired for over a decade,  who still makes monthly trips down Michigan Avenue in Chicago to shop, shop, shop. Her closet is full of enough fur coats to spark a PETA riot.

So is there room in 2014 for a return to financial modesty—room to reject the toy trap? I say yes! Here’s our five-step guide to doing just that.

#1—Someone always has a bigger, faster boat. Playing the game is futile, because no matter how much wealth you have, you can’t win. Someone will always have more.

Rush Limbaugh once boasted about buying the newest, biggest, fastest Gulfstream jet, a G650. He mentioned something about flying nonstop from Raleigh to Honolulu with 20 of his best friends.

I won’t begrudge a man any toy he can truly afford, but Limbaugh is in for a rude awakening. As far back as 2009, the CEO of Gulfstream’s parent company had already announced it was working on developing a plane “beyond” the G650. What will Limbaugh do then? In the meantime, some oil baron from the Middle East is looking down from his 747 with a smirk on his face.

I was on a 13-hour flight from London to Miami years ago and totally bored, so I made a list of all the material things I would love to own. Yeah, I included a private jet and a yacht. Then I calculated the cost of buying and maintaining those toys and realized I’d have to win the lottery every year to afford such luxury. Time to get real!

The sooner you get a handle on needs versus wants, the better off you and your family will be. Owning cool stuff is fun. Most real people, however, have to choose between the neat toys they’d like and saving enough to retire comfortably.

So until those lottery wins come in, I’ll continue flying commercial with the other mere mortals. If you want to treat yourself, pay a little extra to upgrade your seat.

#2—Don’t misunderstand status. In dictionary terms, status means:

sta·tus

1. rank: the relative position or standing of somebody or something in a society or other group
2. prestige: high rank or standing, especially in a community, work force, or organization
3. condition: a condition that is subject to change

In Miller terms, there are least two different types of status. The first I call “pseudo-status.” In the article mentioned above, I wrote about my friend Tom, the poster child for spendaholics anonymous. Tom spent a good portion of his adult life trying to impress others and move up in the pecking order. Could Tom have really bought his way to the top? No.

The second type of status I call “earned status.” Each major professional sport has a hall of fame. The players enshrined in them stood out among their peers and earned their status in those communities.

Earned status is a laudable aspiration. A mentor of mine once said:

“Real status does not come from telling people how important you are, but rather from others recognizing your achievements above the rest. Accomplish something, and they will know you are good. You won’t have to say a word.”

#3—You don’t have to be a scrooge. Owning nice things can make life more enjoyable. There is nothing wrong with buying cool stuff that makes you happy. Enjoying an expensive glass of wine at dinner does not make you an alcoholic or a spendaholic.

However, buying stuff you don’t need with money you don’t have will eventually affect your family, your retirement, and your health. Tom had closets crammed full of clothes, but he still made regular trips to the big city men’s store where he’d drop $10,000 or more each visit. He would leave the store carrying nothing—everything had to be monogrammed and shipped.

I can’t remember the last time I saw Tom in a non-monogrammed shirt. After he died, one of his children confided that his designer jeans and socks were monogrammed too. No wonder they said he had an addiction.

#4—Short-term gratification is just that: short term. Tom’s life saddens me. He had a great business, employed many people, earned a good income, and was an asset to the community. Had he focused on long-term goals rather than indulging short-term emotional needs, he would have achieved the status he so desperately wanted.

Tom fell prey to his desire to constantly feel important. He seemed to think the only way he could satisfy that hunger was to constantly buy clothes and toys. Unfortunately, that addiction is what kept him from his goal. He died bankrupt, and everyone in town knew it.

#5—Remember the lessons your grandparents taught you. You can’t buy real friends, nor can you maintain a friendship by constantly flaunting your wealth. True friendship has nothing to do with money. It comes from who you are and how you behave.

I have a friend whom I’ve known since high school. He grew up on a farm in a single-parent home. He has built quite a business empire and has more than his share of cool and very expensive toys. Unlike Tom, however, he can actually afford to write a check for them. The friends he is most comfortable with are the ones who knew him when he was poor and are happy for his success.

This friend was too busy on the farm growing up to participate in many high school activities. When the school bell rang, he rushed home to work late into the night.

Tom, on the other hand, had a different childhood. His parents looked after him financially. They even started the family business that Tom eventually took over. He never learned to save. Money magically appeared when he wanted it for many decades—until it didn’t.

Maybe things just came too easy for Tom. He never valued having money, only what it could buy him. I’ll leave that for the professionals to ponder.

Forbes and countless T-shirts in the 1980s said, “He who dies with the most toys wins.” There was another popular T-shirt, though—one I’d be proud to wear—that said, “He who dies with the most toys still dies.”

Toys are not the measure of a man. The true captain of his own ship looks after his crew and their welfare until his dying day. The folks I know who are truly happy have done just that. A man who doesn’t fixate on toys he neither needs nor can afford has a much better chance at finding lasting happiness.

I am a big believer that being “rich” is a state of mind. As you cross the threshold toward retirement, the ability to maintain your lifestyle without worry can help keep you in that mindset. Retirement shouldn’t involve a lot of money worries… and it doesn’t have to.

Our goal at Miller’s Money Forever is to help our subscribers become truly rich and make their golden years the best of their lives. Our portfolio is doing quite well, and we have optimal safety precautions in place. If you have not done so already, I urge you to take advantage of our 90-day risk-free offer. We are reasonably priced ($99/year). If you feel we are not for you, cancel within the first 90 days and receive 100% of your money back, no questions asked. Click here to subscribe today.

AUD/NZD Technical Analysis

During the Asian session the pair tested the price pivot zone at 1.0735 and the 50-Day Moving Average.  Positive Australian Employment Change and Unemployment Rate were followed by a rally, keeping the uptrend configuration –higher lows- intact.

The pair topped around 1.0836, just a few pips above last week’s high. A daily close above 1.0815 would make today a Bullish Engulfing Bar and confirm the break of a year old trendline, with a follow-up above 1.0832 indicating the pair has a lot of traction in this area and will move higher in the coming days. Until then, however, the current double top should be treated carefully as it could lead AUD/NZD towards a range personality between the 1.0735 support and the current resistance.

All bullish scenarios are invalidated if AUD/NZD maintains the double top and later drops below 1.0735. This would lead to a test of the 1.0700 handle where the 100 and 200 Simple Moving Averages lie on the 4H timeframe, and even lower towards the 1.0640 support level.

Resistance levels: 1.0832; 1.0934/41; 1.1071.
Support levels: 1.0735; 1.0640; 1.0535.

NZD/JPY Technical Analysis

The pair maintains a bearish tendency after breaking below the up trending channel support earlier this week. While price action has been extremely choppy, NZD/JPY still respects technical levels as it went up to 89.18 during the Asian session, forming a lower high on the 61.8% Fibonacci Retracement from 89.89 down to 88.03.

Between 88.03 and 89.18 the pair will continue to be characterized by indecision, as it struggles between the 50 and 100 Simple Moving Averages on the 4H timeframe. The bearish tendency will be confirmed by breaking through the 88.00 handle, opening the way towards 87.34, the 200 Simple Moving Average on 4H. Since the support of the main channel between August 2013 – April 2014 is located around 84.14, bearish scenarios have a lot of potential if the technical landscape does not change.

Above 89.18 NZD/JPY will switch to a bullish bias and another run at the 90.00 handle will take place. 91.39 is the next resistance level above it, if the resistance of the channels will allow for this kind of rally.

Resistance levels:  89.18; 89.89; 90.00; 91.39.
Support levels: 88.03; 87.34; 86.64; 85.75.

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Prepared by Alexandru Z., Chief Currency Strategist at Capital Trust Markets

By HY Markets Forex Blog

Crude futures were seen trading slightly lower on Thursday, but remained lifted and near the highest price in a month as higher fuel demand in the US countered signs of a slowdown in the Chinese economy and the ongoing tension in Ukraine continues.

West Texas Intermediate (WTI) for May delivery declined 0.32% to $103.28 a barrel on the New York Mercantile Exchange at the time of writing. While the European benchmark Brent crude edged 0.38% lower to $107.57 a barrel on the ICE Futures Europe exchange at the same time.

US Crude Inventories

On Wednesday, reports from the Energy Information Agency (EIA) showed that US refiners supplied approximately 8.81 million barrels a day of gasoline in the last four weeks ending April 4, the highest rate since January 3. Crude stockpiles climbed by 4.03 million barrels last week, while supplies at Cushing, Oklahoma increased by 345,000 barrels, according to the report.

Distillate inventories, including heating oil and diesel, added 239,000 barrels.  A separate report released by the American Petroleum Institute showed that crude stockpiles in the US rose by 7.08 million barrels in the last week.

Tensions in Ukraine

The ongoing tension between Ukraine and Russia continues to escalate between the countries, as the US Secretary of State John Kerry warned Russia that additional sanctions aiming at Russia’s energy, banking and mining sectors will be imposed against the country if Russia intervenes further in Ukraine.

China

Exports and imports in China unexpectedly dropped in March as the market worries that the economy of the world’s second biggest oil consumer could be slowing down.

China exports dropped by 6.6% in March, compared to analysts estimates of a 4.8% expansion. Meanwhile imports shrank by 11.3%, the General Administration of Customs confirmed today.

Libya

In Libya, holder of Africa’s largest reserves, the resumption of the country’s export terminals is delayed as the lawmakers met to discuss an amnesty for the rebels who seized the terminals.

Libya‘s output have dropped by more than 1 million barrels a day in the past year, making the country the smallest among OPEC’s 12 producers.

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By HY Markets Forex Blog

Gold futures were seen climbing on Thursday as the US dollar weakened after the release of the Federal Reserve (Fed) minutes which eased concerns that the central bank would increase interest rates soon.

Gold deliveries for June advanced 0.77% to $1316.00 an ounce at the time of writing on New York’s Comes at the time of writing, while futures for silver edged 0.88% higher to $19.945 an ounce at the same time.

The contract closed 0.76% on Tuesday and 0.32% higher on Wednesday, boosted by the ongoing tension between Ukraine and Russia and the weakened greenback.

Holdings in the world largest gold-backed exchange traded fund, SPDR Gold Trust; were unchanged from Wednesday after dropping to 806.48 metric tons on April 8.

Gold – Fed Minutes

On Wednesday, the US Federal Reserve (Fed) released minutes from its March meeting which showed that policymakers discussed comments made by the Fed Chair Janet Yellen on possibly increasing the interest rates in the next six months after ending the US quantitative easing program. Policymakers said predictions for an interest rate rise might be overstated, according to the minutes.

“The minutes gave a clear message to markets that interest rates are staying low for a long time,” Chris Weston, chief market strategist at Melbourne-based IG, wrote in a note. “However they won’t stay low forever. It also seems that they were designed to be the final word on the interest rate debate that has been ragging since Janet Yellen (seemingly) mistakenly said there would be six month lag between rounding off the bond-buying program and the Fed hiking rates,” he added.

The US central bank reduced its monthly bond-purchases by $10 billion at each of the past three meetings, leaving the purchases at $55 billion.

The yellow metal dropped by 28% last year on worries that the world’s largest economy grew, which would signify the end of monetary stimulus.

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