In May, the International Energy Agency revised its forecast for daily oil demand upward by 1.32 million barrels to more than 94 million barrels by the end of the year.In previous market comments, I have discussed the tremendous benefits to domestic manufacturing from lower natural gas and natural gas liquids (NGL) prices. In mid-June at the Wall Street Journal's CFO Network Conference, executives sounded very up beat. They felt that the economy is improving, employment is increasing and several worst-case geopolitical scenarios have not occurred. Manufacturing is growing faster than the economy in general. We are now starting to see shortages in skilled trade positions. There are several hundred billion dollars of investment into facilities that will process and export natural gas liquids. The worldwide trend of people moving into urban areas will boost energy demand as consumers start to demand more preserved foods that require storage. This may raise demand for U.S. natural gas and natural gas liquids as well as chemicals, plastics, and vinyl products. LyondellBasell (LYB), a plastics and chemical producer, has received a U.S. government permit for multi-plant expansion to increase ethylene production. The $1.3 billion project will increase capacity by 1.85 billion pounds per year raising capacity by about 10%. Another expansion project enabled Westlake Chemical Corp. (WLK) to buy Vinnolit Holdings GmbH, a German manufacturer of polyvinylchloride (PVC). This acquisition allows Westlake to expand its chlor-vinyl business and adds PVC technology to its portfolio. Rising energy prices is translating into higher profits for the players in the Bakken and Eagle Ford shale sectors. West Texas Intermediate (WTI), as already pointed out, has broken out its trading range. The demand for refined products is increasing, causing refiners to buy more crude. This is good news for the energy & production (E&P) companies that I follow. Summer air conditioning use is boosting demand and analysts predict supplies will be tight next winter. For these reasons, I view any pullback in stock prices of the E&P companies as a buying opportunity.
BSG&L Financial Services is a long term investor and I believe that if you are patient, build cash and buy good companies on pullbacks, your portfolio may have good growth over the long term.DISCLAIMER: The investments discussed are held in client accounts as of June 30, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable. Past performance is no guarantee of future results.
The post The enduring strength of the U.S. economy appeared first on Smarter Investing Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.