The Omni Intelligencer

Sell your house faster for more. auction-style-property-sale
  Saturday, June 25, 2016  Home > Money > Finance > Investment > Put Rising Gas Prices to Work for You!
Follow us on Twitter
Every Dollar Helps
Donate using PayPal
Amount:

Put Rising Gas Prices to Work for You!

| More

As I look back on the first quarter of 2012, one of the most glaring events was the rise in gas prices here in the U.S. Wholesale gasoline began the year at $2.66/gallon on the NYMEX, and closed last Friday at $3.33, a gain of 67 cents ... a jaw-dropping 25 percent.

The reasons for the increased gas prices are varied. Generally speaking, though, they've risen because oil prices have risen. I know that might sound obvious. But I'm not talking about the oil prices we follow in the U.S., which is known as West Texas Intermediate (WTI).

Instead, I'm talking about what has replaced WTI as the global benchmark of oil: Brent crude.

Brent crude rose from $109/barrel (bbl) to over $125/bbl in the first quarter on reduced supply coming out of the Middle East and on concern regarding potential military conflict between Israel and Iran.

In addition to the general rise in oil prices, we have seen a widening of the difference, or spread, between WTI and Brent crude prices. That spread has increased from about $9 at the beginning of the year to over $19 as of Monday morning. And this has created a very unique opportunity for refining companies in the central U.S.

You see, those refiners have the ability to buy crude oil at the WTI price, then refine it and sell gasoline based on the Brent crude price ... which is over $120/bbl.

These market dynamics have occurred because of global unrest in the Middle East — not because oil company executives are greedy. So when the media, or anyone else, tries to vilify them, don't believe it. The truth is prices are just reacting to the market in which they exist.

Now the reason there is such a large spread between WTI crude and Brent crude is mainly because the WTI crude we produce here in the Baaken Shale and middle of the country is "trapped" since there are very few pipelines that can transport it to the Gulf of Mexico for export.

But That Will Be Changing ...

Companies dedicated to moving oil across the U.S.  then on to foreign ports are sure to prosper from the additional flow.
Companies dedicated to moving oil across the U.S. then on to foreign ports are sure to prosper from the additional flow.

The integral Seaway Pipeline, which carries crude oil from the Gulf of Mexico to Cushing, Oklahoma, is going to be reversed. It will then carry oil from Cushing, Oklahoma to the Gulf of Mexico to be exported. In addition, other pipeline companies have discussed switching the direction of their pipelines to help relive the glut of WTI crude oil sitting in the U.S.

One potential way you could profit from this trend is by purchasing shares in master limited partnerships (MLPs) that make money as crude oil is transferred through their pipelines. Additionally, oil tanker companies will benefit from this increased export as well.

Two ways to play that:

First, is the Alerian MLP ETF (AMLP), which owns shares in infrastructure-related MLPs.

And the second, to a lesser extent, is the Claymore/Delta Global Shipping ETF (SEA), which owns shares in a tanker companies.

As a savvy contrarian investor, you must constantly be searching for opportunities in unique events. Indeed, the very wide WTI/Brent spread is one of those events. And as that spread narrows, there will potentially be multiple opportunities to profit with MLPs and tanker companies, which could leave you smiling the next time you fill up.

Source: moneyandmarkets.com


Sell your house faster for more. auction-style-property-sale
| More
 

Current Headlines - Finance

  • Wall Street eyes low rates, earnings after Brexit rout 25 Jun 2016 | 3:12 am

    Traders work on the floor of the New York Stock Exchange (NYSE) in New YorkU.S. companies do stand to lose from Britain's divorce from the EU, a process expected to take two years to negotiate. Fed Chair Janet Yellen is scheduled to speak at an event in Portugal on Wednesday and investors will want to know how she sees the so-called Brexit changing the outlook for the U.S. economy and interest rates.


  • Worst day in 10 months as Wall Street reacts to 'Brexit' 25 Jun 2016 | 12:01 am

    Traders work on the floor of the NYSEBy Rodrigo Campos NEW YORK (Reuters) - The S&P 500 turned negative for the year-to-date on Friday as Wall Street suffered its largest selloff in 10 months after Britain's decision to leave the European Union caught traders wrong-footed. In the busiest trading volume for a single session in nearly five years, financial stocks led the decline on the S&P 500 with a 5.4 percent drop -the largest for the sector since November 2011. The S&P 500 lost all the year's gains and suffered its largest decline since late August last year.


  • Robo-adviser Betterment suspended trading during Brexit upheaval -WSJ 24 Jun 2016 | 8:10 pm

    A trader from BGC, a global brokerage company in London's Canary Wharf financial centre reacts during trading(Reuters) - Betterment LLC, an automated financial adviser, suspended all trading on Friday morning as Britain's vote to quit the European Union sent a shock wave through global financial markets, The Wall Street Journal reported. Clients were not aware of the halt, which ran from the market's 9:30 a.m. open until noon, the Journal said. (http://on.wsj.com/28VBXzp) The company, which manages $4.8 billion (3. ...


  • Russell reconstitution adds to U.S. market's volume, volatility 24 Jun 2016 | 6:12 pm

    FTSE Russell reconfigured its indexes at the close in an annual event that triggered the highest trading volume for any session in almost five years and added to Friday's high volatility in the U.S. stock market. Trades in about 933 million shares representing $20.6 billion were executed in Nasdaq's "closing cross" in 0.8 seconds across some 2,464 Nasdaq-listed stocks, according to bourse. The closing cross brings together the buy and sell interest in specific Nasdaq, NYSE and NYSE MKT stocks and executes all shares for each stock at a single price, Nasdaq said.

  • Frankfurt or bust? Wall St. bankers in London ponder life post Brexit 24 Jun 2016 | 4:47 pm

    A man has lunch surrounded by pictures of former British PM Churchill as a TV screen shows Britain's PM Cameron speaking after Britain voted to leave the European Union at a British pub in MadridBy Olivia Oran, Anjuli Davies and John O'Donnell NEW YORK/LONDON/FRANKFURT (Reuters) - Big Wall Street banks are scouring Europe to find a new home for their traders, bankers and financial licenses now that London is on shaky ground as the region's preeminent financial hub. Bank executives have been making contingency plans for months, but many were still surprised by the outcome of a British vote on Thursday evening to leave the European Union (EU). You might end up having a more fragmented financial industry in Europe." Among the questions being asked in C-suites across Wall Street: What's the best European city to house a broker-dealer, if not London?


  • Obama uses Hiroshima visit as opportunity to urge no nukes 27 May 2016 | 2:00 pm

    Obama uses Hiroshima visit as opportunity to urge no nukesHIROSHIMA, Japan (AP) — With an unflinching look back at a painful history, President Barack Obama stood on the hallowed ground of Hiroshima on Friday and declared it a fitting place to summon people everywhere to embrace the vision of a world without nuclear weapons.


  • Senate sleuths focus on ex-State Department aide in Clinton email ‘cover-up’ 27 May 2016 | 1:32 pm

    Senate sleuths focus on ex-State Department aide in Clinton email ‘cover-up’As Hillary Clinton seeks to rebound from a highly critical report from the State Department’s inspector general, Senate investigators and a conservative group are zeroing in on newly revealed evidence about the activities of a now retired State Department computer specialist in orchestrating what they charge was a “cover-up” of the former secretary of state’s email practices. The role of John Bentel, whose identity as a key figure in the email probes was first reported by Yahoo News on Wednesday, is expected to be one focus of questioning today when Clinton’s former chief of staff, Cheryl Mills, is deposed in a lawsuit brought by Judicial Watch over the State Department’s handling of Freedom of Information Act requests relating to Clinton’s emails, according to a source close to the case.


  • G7 told to act on antibiotics as dreaded superbug hits U.S. 27 May 2016 | 10:39 am

    Colonies of E. coli bacteria are seen in a microscopic image courtesy of the CDCBy Kylie MacLellan and Ben Hirschler ISE-SHIMA, Japan/LONDON (Reuters) - Britain told the G7 industrial powers on Friday to do more to fight killer superbugs as the United States reported the first case in the country of a patient with bacteria resistant to a last-resort antibiotic. U.S. scientists said the infection in a 49-year-old Pennsylvania woman "heralds the emergence of truly pan-drug resistant bacteria" because it could not be controlled even by colistin, an antibiotic reserved for "nightmare" bugs. In Japan, British Prime Minister David Cameron said leading countries needed to tackle resistance by reducing the use of antibiotics and rewarding drug companies for developing new medicines.


  • Statue of Liberty, other world sites threatened by climate change, says U.N. 27 May 2016 | 10:29 am

    Statue of Liberty, other world sites threatened by climate change, says U.N.The Statue of Liberty is seen in New York harbor. Climate change might dampen Lady Liberty’s glow, according to experts. The United Nations released a report Thursday saying 31 natural and cultural World Heritage sites in 29 countries are vulnerable to the effects of climate change: rising temperatures, rising sea levels, intensifying storms, longer droughts and so on.


  • 19 people rescued from Kentucky cave 31 Dec 1969 | 6:00 pm


The fastest and best way to sell real estate.
auction-style-property-sale