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Energy Wars, The Fight for Market Share

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Energy Wars, The Fight for Market Share

Energy Wars, The Fight for Market Share While the glut in global oil supply had initially driven oil prices down 60% to a 6-year low in March 2015, prices have rebounded more than 30% since.

Although oil demand has surprised to the upside, we believe that the market is overly optimistic about supply tightening. The incentive for producers to reduce oil output diminishes the longer oil prices remain high.

We believe that there is potential for a short-term correction in prices, providing investors a more attractive entry point in the near future.

After high-cost producers actually respond to the weaker prices and cut production, we see the oil prices rebounding again in Q4 2015 and beyond.

OPEC will continue to rebuild the market share that it has lost to high producers in the era of $100+/bbl oil.

The US shale industry is unlikely to be the main casualty from the fight for market share. Being a more nimble, price responsive industry with significantly lower lead times than conventional oil, US shale is likely to continue to be a growth industry in the long term. We believe that high cost conventional players will become the main losers from the current price war.

OPEC plays the long game

As widely expected, OPEC maintained the status quo, keeping its production ceiling at 3o million barrels a day at its June 5th meeting. In sharp contrast to its November 2014 meeting, when the market was expecting a cut that was not delivered, oil prices increased after the meeting. OPEC had cited the increase in demand as a reason for maintaining current production levels and the market took that as a bullish sign.

However, we would caution that the rise in demand has been driven by bargain hunting that will fade as prices increase. China’s filling of strategic reserves is likely to continue this year, but will not be a permanent source of new demand once the new storage capacity has been exhausted.

ETFS01

Market share in context

It is useful to put the fight for market share into context. In “Energy Wars – the battle of technologies” (March 2015) we wrote about the disruptive force of fracking in the US that has usurped lower-cost incumbents from their prior position of dominance in global oil production.

It is clear from the chart opposite that market share has never been static. In 1985 for example US production of oil was considerably larger than Saudi Arabian production. OPEC in aggregate was producing less than a third of global production.

However, by 2005, US production was reduced to less than 9% of global production while Saudi Arabian production accelerated to over 13%. Russian production also declined to under 12% of global from close to 19% in 1985. OPEC production grew to over 40% of global production.

By 2014, US production rebounded to over 13% of the global total, taking market share from a loss in other OECD countries. Meanwhile OPEC had only given up 1.5% of its global share between 2005 and 2014.

ETFS02

If the US maintained the sharp increase in oil production that it has seen over the past few years (see chart below), it would only be a matter of time before the US would take a more significant share of global production away from OPEC. The US had already overtaken Saudi Arabia in 2014.

With US shale oil production being more costly than conventional oil production from most OPEC countries, it is unsurprising that OPEC no longer wants to support a price of US$100/bbl, just to see its market share erode by the US and other high-cost producers. OPEC declared war on market share in its November 2014 meeting and followed through by maintaining an elevated production celling in its June 2015 meeting.

ETFS03

It is also clear that the US has only a small fraction of the world’s proved reserves of oil (see next page). Collectively, OPEC has more than 70% of the wold’s proved oil reserves, but only produces just over 40% of global oil output. This imbalance would deteriorate even more if high cost producers including the US continue to raise production. It is therefore unsurprising that OPEC seeks to increase its output to a level that is commensurate with its reserves.

ETFS04

OPEC production continues to increase

Despite OPEC setting it ceiling at 30 million barrels per day, in reality, it produces far more than this. OPEC output is currently more than 31 million barrels per day according to their official statistics. With oil prices significantly lower than the US$100/bbl mark of last year, individual OPEC members are forced to produce and sell more to make up for lost revenue. Individual countries are likely to produce as much as they can without care for the overall ceiling or their own quota. While Saudi Arabia’s oil minister described the last OPEC meeting as “surprisingly amicable” we believe that discord between members is rife. The smaller OPEC members are calling for production cuts, but the Saudi-led GCC block believes it will bear the brunt of the loss in market share as smaller countries produce more.

Although the financial position of OPEC members such as Nigeria and Venezuela remains precarious, Saudi Arabia with next to no sovereign debts to its name can afford to run budget deficits and play the long game.
Potential easing of international sanctions against Iran could increase supply from OPEC even more. Iran is unlikely to heed to production quotas set by OPEC as it desperately tries to rebuild the market share it has lost. Indeed Iraq is not even set an OPEC quota.

ETFS05

Production elsewhere remains elevated

While US rigs have been shut off at an unprecedented rate, actual US output has continued to increase. That reflects the fact that the most inefficient rigs were the first to be switched off and remaining rigs have been moved to more easily accessible oil.

ETFS06

Eventually the reduction in US rigs should lead to lower production in the US. As the productivity of a well can fall by as much as a half after the first year of production, a lack of new investment is likely to translate into lower production. Elsewhere, the evidence of supply tightening is limited. Global output of oil has only just started to level out. High cost producers outside of the US mainly extract conventional oil which has long lead times. They take a long time to both open and shut production and therefore cannot be as responsive to price changes as the US shale oil producers.

ETFS07

Global CAPEX to decline

About US$100bn of CAPEX cuts have been announced across the industry. That will see projects, particularly deep-water and capital intensive ones getting deferred and even cancelled, helping to tighten the market.

However, we believe the market has reacted too early to this prospect of this tightening. The premature gains in price could stifle the progress in cutting supply. The common belief across the industry that “somebody else will cut while I continue to invest and expand” obviously has its limitations.
Also it is unclear how much of the US$100bn cuts in CAPEX relates specifically to oil production as opposed to gas production or even oil projects that have not even been sanctioned yet.

Demand driving the recent gains in price

Most of the gains in oil price since the last OPEC meeting seem to stem from optimistic demand projections. Both the OPEC and International Energy Agency have raised their demand forecasts. However, if consumer demand is indeed that sensitive to falling prices, it will equally be sensitive to rising prices. Once again, a premature increase in price could choke off some demand.

ETFS08

Chinese strategic petroleum reserves

After coming close to filling its reserves earlier in the year, China is building new storage. That will act as a tailwind for demand. However, that source of demand cannot be sustained indefinitely and tightening supply will be needed to achieve a global balance.

ETFS09

A political premium in oil

With approximately 4% of global oil supplies going through the Bab el Mandab choke point near Yemen, the Saudi Arabia-led airstrikes on Yeman pose a risk to oil reaching its intended destination. The conflict is showing no signs of respite, with 31 people killed last week by the Royal Saudi Air Force, bringing the UN’s estimate of civilian deaths to 1,412 since March. Some of the gains in price since March, when the conflict started, reflect the political premium that the war poses. Easing or aggravation of the conflict could drive the political premium lower or higher.

The penetration of ISIS into Iraq and the progress in international negotiations with Iran’s are also likely to change the political premium and dictate volatility in crude oil prices.

ETFS10

Price outlook: dip and then rise

We believe the optimism in supply tightening will be dialed back until we actually see supply making a material cutback. That will see prices dip initially. That price dip will be important in maintaining the current pace of demand recovery. China will continue to fill its new strategic reserves, providing a tail wind to oil demand.

Over the past month, net speculative long positioning in Brent futures contracts has contracted by 44% as investors have curbed their expectations for price gains.

ETFS11

Once CAPEX declines start to bite into production levels we believe that prices will stage a recovery. That decline in production will be borne by high cost producers, such as deepwater operations and other capital intensive projects.

We believe that Brent and WTI could decline to US$60/bbl and US$55/bbl respectively, before recovering to US$75/bbl and US$70/bbl in 2016.

Market share outlook:

OPEC will continue to produce more oil and pursue a strategy of building market share. OPEC’s market share could rise to 45% from 42% currently, especially if sanctions against Iran are lifted.

Despite the decline in US rig counts we don’t expect US shale oil production to materially decline over a sustained period. Those rigs are relatively easy to switch back on and when other high cost producers have cut back, the nimble US shale oil industry will be able to take advantage of better pricing. The number of oil wells that have been drilled but not yet bought into production have soared. According to IHS there are approximately 1,400 drilled but uncompleted wells (DUCs) in the Eagle Ford in south Texas (as of April 2015). Of these uncompleted wells, approximately 40% could be economical (i.e. break-even) at prices below US$30/bbl according to IHS. Assuming 50 wells per month can be completed from the DUCs, we could see an additional 123,000 barrels of oil per day produced by the end of the year. Wood Mackenzie estimate the number of DUCs across the US stood at 3,000 (March 2015). In short, the potential for production from the US to ramp up quickly is tremendous. We do not believe the US will be a casualty in terms of market share from the current price war – it will be other high cost producers.

Important Information

This communication has been provided by ETF Securities (UK) Limited (“ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority  (the “FCA”).

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CBUV ETF satsar på Metaverse

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iShares Metaverse UCITS ETF USD (Acc) (CBUV ETF) med ISIN IE000RN58M26, försöker följa STOXX Global Metaverse-index. STOXX Global Metaverse-index spårar företag från hela världen som har affärsverksamhet i metaverse-ekosystemet. Aktierna som ingår filtreras enligt ESG-kriterier (miljö, social och bolagsstyrning).

iShares Metaverse UCITS ETF USD (Acc) (CBUV ETF) med ISIN IE000RN58M26, försöker följa STOXX Global Metaverse-index. STOXX Global Metaverse-index spårar företag från hela världen som har affärsverksamhet i metaverse-ekosystemet. Aktierna som ingår filtreras enligt ESG-kriterier (miljö, social och bolagsstyrning).

Den börshandlade fondens TER (total cost ratio) uppgår till 0,50 % p.a. iShares Metaverse UCITS ETF USD (Acc) är den enda ETF som följer STOXX Global Metaverse-index. ETF:n replikerar det underliggande indexets prestanda genom fullständig replikering (köper alla indexbeståndsdelar). Utdelningarna ackumuleras och återinvesteras.

iShares Metaverse UCITS ETF USD (Acc) är en liten ETF med tillgångar på 88 miljoner euro under förvaltning. Denna ETF anserades den 7 december 2022 och har sin hemvist i Irland.

Investeringsmål

Fonden strävar efter att uppnå en avkastning, genom en kombination av kapitaltillväxt och inkomst, som återspeglar avkastningen från STOXX Global Metaverse Index.

Handla CBUV ETF

iShares Metaverse UCITS ETF USD (Acc) (CBUV ETF) är en europeisk börshandlad fond. Denna fond handlas på flera olika börser, till exempel Deutsche Boerse Xetra och London Stock Exchange.

Det betyder att det går att handla andelar i denna ETF genom de flesta svenska banker och Internetmäklare, till exempel DEGIRONordnet, Aktieinvest och Avanza.

Börsnoteringar

BörsValutaKortnamn
gettexEURCBUV
Borsa ItalianaEURMTAV
Euronext AmsterdamUSDMTAV
London Stock ExchangeGBPMTAV
SIX Swiss ExchangeUSDMTAV
XETRAEURCBUV

Största innehav

KortnamnNamnSektorVikt (%)ISINValuta
NVDANVIDIA CORPInformationsteknologi7.79US67066G1040USD
COINCOINBASE GLOBAL INC CLASS AFinans7.15US19260Q1076USD
LOWLOWES COMPANIES INCSällanköpsvaror7.10US5486611073USD
METAMETA PLATFORMS INC CLASS AKommunikationstjänster5.96US30303M1027USD
SHOPSHOPIFY SUBORDINATE VOTING INC CLAInformationsteknologi5.00CA82509L1076USD
ADSKAUTODESK INCInformationsteknologi4.25US0527691069USD
ADBEADOBE INCInformationsteknologi3.28US00724F1012USD
EAELECTRONIC ARTS INCKommunikationstjänster3.12US2855121099USD
RBLXROBLOX CORP CLASS AKommunikationstjänster3.10US7710491033USD
7974NINTENDO LTDKommunikationstjänster2.65JP3756600007JPY

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Europeisk försvarsutgiftsboom: Viktiga investeringsmöjligheter mitt i globala förändringar

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Jane Edmondson, Head of Index Product Strategy på TMXVettaFi, träffade Steve Darling från Proactive för att diskutera det snabbt utvecklande globala försvarslandskapet och de investeringsimplikationer som en europeisk försvarsutgiftsboom medför. Med geopolitiska spänningar på uppgång och skiftande försvarsprioriteringar måste investerare navigera efter nya möjligheter och risker i sektorn.

Jane Edmondson, Head of Index Product Strategy på TMXVettaFi, träffade Steve Darling från Proactive för att diskutera det snabbt utvecklande globala försvarslandskapet och de investeringsimplikationer som en europeisk försvarsutgiftsboom medför. Med geopolitiska spänningar på uppgång och skiftande försvarsprioriteringar måste investerare navigera efter nya möjligheter och risker i sektorn.

Edmondson lyfte fram Europas oöverträffade ökning av försvarsutgifterna, ett direkt svar på USA:s beslut att minska militärt bistånd till Ukraina. Centralt i denna förändring är EUs initiativ ”Rearm Europe Readiness 2030” på 800 miljarder euro, som syftar till att stärka den militära beredskapen. Detta inkluderar betydande investeringar i nyckelförsvarstekniker och en dedikerad kreditfacilitet på 150 miljarder euro för att förbättra militär kapacitet.

”Det kommer att bli mycket utgifter framöver,” noterade Edmondson och betonade stora tillväxtområden som artificiell intelligens, cyberförsvar, drönarteknik och avancerade artillerisystem.

Hon påpekade att ledande europeiska försvarsföretag – inklusive Rheinmetall, BAE Systems, Thales, Dassault och Leonardo SPA – kommer att dra stor nytta av denna expansion. Dessutom framträder Sydkoreas Hanwha Aerospace som en nyckelspelare i globala försvarskontrakt. Däremot upplever amerikanska försvarsföretag motvind på grund av budgetnedskärningar och inställda upphandlingsavtal, vilket leder till en relativ nedgång i sektorn.

En annan kritisk förändring av global försvarsupphandling håller på att utvecklas när traditionella amerikanska allierade omprövar sina försvarsinköp. Kanada och Portugal, till exempel, omvärderar beställningar på USA-tillverkade F-35 stridsflygplan till förmån för alternativa alternativ, som flygplan från Dassault Aviation.

Edmondson betonade att dessa geopolitiska omställningar skapar stark ekonomisk medvind, särskilt för Tyskland, som kommer att investera uppskattningsvis 500 miljarder euro i försvar under de kommande åren. Hon citerade en nyligen gjord rapport från Goldman Sachs, som förutspår att hälften av dessa utgifter direkt kommer att underblåsa BNP-tillväxten – en effekt som redan återspeglas på finansmarknaderna. Medan europeiska aktier, särskilt Euro Stoxx 50-index, tar fart, har stora amerikanska aktieindex kämpat för att hålla jämna steg.

”Detta är en kraftfull påminnelse för investerare att hålla sig diversifierade, behålla exponering utanför amerikanska marknader och allokera kapital till framväxande globala försvarsteman,” rådde Edmondson.

När globala militära strategier fortsätter att utvecklas kan investerare som positionerar sig tidigt i viktiga internationella försvarssektorer dra nytta av denna historiska förändring.

HanETF planerar en ny försvarsfond med fokus på europeiska företag som kommer att börja handlas i nästa vecka. Vi har ännu inte namnet på denna, men kortnamnet på tyska Xetra är 8RMY medan det i London blir tickern ARMY.

Handla ASWC ETF

HANetf Future of Defence UCITS ETF (ASWC ETF) är en europeisk börshandlad fond. Denna fond handlas på flera olika börser, till exempel Deutsche Boerse Xetra och London Stock Exchange. Av den anledningen förekommer olika kortnamn på samma börshandlade fond.

Det betyder att det går att handla andelar i denna ETF genom de flesta svenska banker och Internetmäklare, till exempel  NordnetSAVRDEGIRO och Avanza.

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WNUC ETF ger exponering mot uran och kärnkraft

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WisdomTree Uranium and Nuclear Energy UCITS ETF USD Unhedged Acc (WNUC ETF) med ISIN IE0003BJ2JS4, försöker spåra WisdomTree Uranium and Nuclear Energy UCITS-index. WisdomTree Uranium and Nuclear Energy UCITS-index spårar företag över hela världen som är engagerade inom uran- eller kärnenergiindustrin.

WisdomTree Uranium and Nuclear Energy UCITS ETF USD Unhedged Acc (WNUC ETF) med ISIN IE0003BJ2JS4, försöker spåra WisdomTree Uranium and Nuclear Energy UCITS-index. WisdomTree Uranium and Nuclear Energy UCITS-index spårar företag över hela världen som är engagerade inom uran- eller kärnenergiindustrin.

Den börshandlade fondens TER (total cost ratio) uppgår till 0,45 % p.a. WisdomTree Uranium and Nuclear Energy UCITS ETF USD Unhedged Acc är den enda ETF som följer WisdomTree Uranium and Nuclear Energy UCITS-index. ETFen replikerar det underliggande indexets prestanda genom full replikering (köper alla indexbeståndsdelar). Utdelningarna i ETFen ackumuleras och återinvesteras.

Denna ETF lanserades den 5 mars 2025 och har sin hemvist i Irland.

WisdomTree Uranium and Nuclear Energy UCITS ETF (”Fonden”) strävar efter att spåra pris- och avkastningsutvecklingen, före avgifter och utgifter, för WisdomTree Uranium and Nuclear Energy UCITS Index (”Indexet”). Indexet är utformat för att följa resultatet för företag som är involverade i uran- och kärnenergiindustrin.

Varför investera?

  • Få en unik strategi med hög övertygelse för investeringar i uran- och kärnenergiföretag.
  • Kärnenergi är avgörande för den framtida hållbara energimixen, eftersom kraven på energi ökar, kommer det att bli nödvändigt att skala upp tillförlitliga källor för ren energi.
  • Denna ETF erbjuder exponering mot en diversifierad korg av företag som är involverade i uran- och kärnenergimarknaden, såsom uranbrytning, byggande av kärnkraftsinfrastruktur eller bedriver avancerad forskning om framtida kärnteknik.
  • Analysen för urval och viktning av företag i indexet utförs av WisdomTree med betydande expertis i att konstruera tematiska index, vilket säkerställer att portföljkorgen förblir fokuserad och relevant.
  • ETFen är UCITS-kompatibel.

Handla WNUC ETF

WisdomTree Uranium and Nuclear Energy UCITS ETF USD Unhedged Acc (WNUC ETF) är en europeisk börshandlad fond. Denna fond handlas på flera olika börser, till exempel Deutsche Boerse Xetra och London Stock Exchange.

Det betyder att det går att handla andelar i denna ETF genom de flesta svenska banker och Internetmäklare, till exempel  Nordnet, SAVR, DEGIRO och Avanza.

Börsnoteringar

BörsValutaKortnamn
Borsa ItalianaEURNCLR
London Stock ExchangeGBXNCLP
London Stock ExchangeUSDNCLR
XETRAEURWNUC

Största innehav

NamnKortnamnLandVikt %
1. Cameco CorpCCJ USCA7,63%
2. Paladin Energy LtdPDN AUAU6,81%
3. Uranium Energy CorpUEC USUS6,66%
4. Denison Mines CorpDNN USCA6,39%
5. Doosan Heavy Industries034020 KSKR6,06%
6. NEXGEN ENERGY LTD COMMON STOCKNXE5,98%
7. GE Vernova IncGEV USUS5,27%
8. Air Liquide SAAI FPFR5,10%
9. Atkinsrealis Group IncATRL CNCA4,79%
10. Energy Fuels IncUUUU USUS4,70%

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