I have been carefully scouring the resource markets for exceptional opportunities over the past few months and indicated numerous times about the potential rebound and breakout in uranium, graphite, PGM’s and rare earth mining stocks. At the end of October, I said to watch for a rebound in uranium as major volume accumulated shares of Uranium Participation Corp which has now just broken out into new nine month highs and made a bullish golden crossover of the 50 and 200 day moving average.

I also told you about increased M&A in the rare earths and graphite sector.  Now Molycorp has justbroken out on huge volume as even this giant could be a takeout target of Molymet as it trades below book value.

In addition, I highlighted a few months ago to buy NYSE graphite bellwether Graftech and some of the high quality graphite miners.  I wrote in this article published back in November about getting ready for a rebound in graphite, “I recently highlighted Graftech (GTI) in early October and believed the stock was about to make a major move as it was trading below book value. At that time, Graftech’s market cap was below its revenue which signaled an excellent value play. Since that time Graftech has soared over 40% while the S&P500 has gained under 7%…Some of the more advanced junior graphite miners which may benefit from this upturn is Flinders Resources (OTCPK:FLNXF), Focus Graphite (OTCQX:FCSMF) and Northern Graphite (OTCQX:NGPHF).”

All these graphite stocks mentioned above have been breaking out on major volume this week as predicted. The catalyst may have been the Chinese off take announced with Focus Graphite on its Quebec Lac Knife Deposit. This is the first major off-take agreement in the graphite sector and it comes from China the largest exporter of graphite. This indicates to the markets what I have been saying for years that China is looking to import graphite over the longer term and Western graphite assets are in demand.

…..read page 2 & 3 HERE

Investors who want to know how the energy sector will be doing in the coming year are, in my opinion, asking the wrong question. There really is no such thing as “the energy sector,” because the performance of the different resources—from oil and gas, to uranium, to coal, to renewables—can vary dramatically.

Case in point: while unconventional oil exploration and production have seen a huge upswing in recent years, thanks to the vast success of the Bakken and other oil-rich shale formations, at the same time natural gas has taken a nosedive, due to a supply glut that still hasn’t found its balancing point.

To find out which investments will deliver the greatest profits for well-positioned investors in 2014, my team and I have identified three trends that are hot… and may become even hotter in the course of this year.

HOT: Service Companies in North America

The oil and gas production in the United States is mature. Rather than looking for new basins, companies are looking to “rediscover” the past by applying new technology to increase economic production from known oil and gas fields.

This new technology comes in a variety of shapes and sizes: better software, bigger rigs, more efficient drilling processes. And it’s being applied everywhere, onshore and offshore, conventional and unconventional alike.

Just as an example, today we’re seeing operators drill more than 50 horizontal wells from a single well pad, a far cry from just a decade ago.

Exploration and production companies know that the focus moving forward is not just the amount of oil they can pump out of the ground, but the profit they can extract from every barrel (what we call the “netback”). This is even more true in the mature unconventional basins such as the Bakken, Eagle Ford, and the Marcellus shale plays, where the margins are tight and require an oil price of more than US$70 per barrel in order to be economic.

This means E&P companies have to use the best ways to increase production from every well—while at the same time reducing their drilling costs. Failure to do so would be to guarantee a firm’s demise.

The dilemma for E&P companies is having to prioritize what their shareholders want in the short term—growing production and dividends—over whatever may be best for the company in the long term. At the same time, they have to fight the natural decline of oil coming out of their wells.

All the while, service companies continue to extract fees for their tools and services. Drillers, pumpers, frackers, and other oilfield-service guys make money regardless of whether E&P companies find oil or produce it at economic rates.

We’ve said it before: Many E&P companies are running on a treadmill, and the incline is going higher and higher, which means higher costs to produce the same amount of oil.

Of course, not all service companies will rake in the dough. The ones that will do the best are the ones that can consistently stay at the forefront of technology and keep signing contracts with the supermajors like Exxon, Chevron, and Shell.

HOT: European Energy Renaissance

Russia’s grip on European energy continues to tighten, and there’s a push to produce oil and gas within their own borders all around Europe.

2014 looks to be an exciting year for companies like one of our Casey Energy Report stocks, a TSX-V-listed oil and gas explorer and producer with a 2-million-acre concession in Germany. We call the deposit it’s sitting on the “Next Bakken” because we believe that its potential to deliver exceptional output could rival that of the famed North American formation.

This development is still in its early stages, but investors who position themselves now could see outsized gains for years to come. It’s not really a question of “if” the oil is there—previous oil production in the very same location yielded more than 90 million barrels—but of “how much” oil can be extracted with the modern methods not available the last time companies worked on this field.

The company has completed its first well and will continue to drill additional wells (both vertical and horizontal) next year. While the initial well cost more than anticipated, it’s a good start that indicates economic oil can be produced in Germany. We’re also confident this company’s experienced management team is applying the lessons of its first foray to reduce drill costs on future wells.

As our Energy Report pick proves up any of its projects in 2014 and early 2015, we can expect another of our holdings, which has just entered the German oil and gas scene, to either farm into the company or even buy it out.

We predict that by the end of 2015, our “Next Bakken” play, and others like it, will have attracted a lot of attention, not just from individual speculators, but from institutional investors as well—and investors who have gotten in early will be very happy indeed.

Another of our portfolio holdings is just beginning to drill on its Romania projects after a series of delays due to politics and bureaucracy. We have reason to be optimistic because its JV partner, a Gazprom subsidiary, has drilled successful wells on the same basin on the other side of the border in Serbia. If our pick has anything close to that level of success, the markets will surely take notice and its shares will go much higher.

As the “Putinization” of the global energy markets continues and Russia’s dominance grows, European countries become increasingly more desperate to escape from under Putin’s heavy thumb and to start developing their own energy resources.

The European Energy Renaissance is real, and we continue to monitor companies that are funded and have the permits and ability to drill game-changer wells in Europe in 2014.

HOT: Uranium

During a recent trip to London, I spoke with Lady Barbara Judge, chairman emeritus of the UK Atomic Agency and an advisor to TEPCO on the Fukushima nuclear disaster in Japan. I asked her point-blank whether Japan was willing to bring any nuclear reactors back online in 2014.

Her answer was an unequivocal “Yes.” The Japanese have no choice, really, because the alternative—importing liquefied natural gas (LNG)—is far too expensive.

Japan is the world’s largest importer of LNG and has had to double its imports since the Fukushima incident. For that privilege, the country pays some of the highest rates on the planet—almost four times more than what we pay for natural gas in North America.

South Korea also shut down its nuclear plants post-Fukushima to do inspections and maintenance upgrades, and it, too, has had to import a lot of LNG. Both countries are looking to restart their nuclear reactors so they can stop paying a fortune to foreign energy suppliers. When these countries restart their reactors, they’ll also restart the uranium market, so we expect uranium prices to begin to shake loose of the doldrums this year.

Another driver will be throwing the switch at ConverDyn, the US uranium facility that is slated to start converting natural U₃O₈ to reactor-ready fuel in late 2014 or early 2015.

We currently hold two solid uranium companies in the portfolio—one is a US-based small-cap producer (one of the very few in America), the other is the lowest-risk way to play the uranium market that I know of. Both, we believe, will take off in 2014 on the renewed interest in uranium and the associated stocks.

If you want to know more about our thoroughly vetted energy stocks and their potential for amazing gains in 2014 and beyond, give the Casey Energy Report a try. You’ll find all my“What’s Hot” predictions and the full names of the stocks I’ve mentioned above in our January forecast issue… plus the energy sectors you should avoid like the plague this year… as well as a feature article on elephant oil deposits in the Gulf of Mexico and a new stock pickready to profit from them.

Giving the Casey Energy Report a try is risk-free because it comes with a 3-month, full money-back guarantee. If the Energy Report is not all you expected it to be, just cancel within those 3 months and get a prompt, full refund. Or cancel any time AFTER the 3 months are up for a prorated refund. Getting started is easy—just click here.

It was the most surprising bull market of 2013… 

One that almost nobody is talking about… And it has huge implications for natural-resource investors in 2014… 

I’m talking about the bull market in Chinese commodity imports. 

I know this statement might sound odd. So let me explain…

Most folks know that over the past 20 years, China has become a major player in the commodity sector. It’s the world’s largest importer of vital raw materials, like iron ore and copper. China’s emergence as a major economic power helped drive a big bull market in commodities from 2002 to 2008. 

But over the past few years, calling for a “China crash” has become a popular activity for Wall Street analysts, fund managers, and CNBC talking heads. It has become so popular that if you watch financial television for a week, you’d think China is imploding. 

Because China is such a major driver of commodity demand, it’s vital for us to monitor what’s going on there. As I mentioned, China is the largest importer of iron ore and copper. And as of December 2012, it surpassed the U.S. as the world’s largest oil importer. Despite what many people believe, China’s economy is still growing… and its demand for imported resources is at an all-time high. 

Over the next few days, we’ll take a close look at the facts… and how they can help you make terrific investments over the coming years… 

China has the world’s largest population, and its economy is growing more than 5% per year. This means a large and growing demand for cars. 

In 2002, there were 3.3 million cars sold in China. It took steel, copper, and other raw materials to build each one. It took crude oil and its derivatives to keep them running. 

In 2012, there were 20 million cars sold in China. That’s a huge 500% increase in just 10 years. And when you compare China’s car market with America’s, you can see there’s a tremendous amount of growth ahead… 

In 2012, there was about one car for every 85 people in China. In America, the ratio was 0.9 cars per person. In other words, we have nearly as many cars as people. This simple comparison shows how China has lots of catching up to do with developed nations like the U.S. 

Contrary to what many people believe, China’s economy isn’t falling apart. For proof, we can look at China’s car imports. As you can see in the chart below, they just hit an all-time high. The chart shows monthly imports of cars and car chassis (which become cars). 

All of those cars need oil and gasoline. China’s demand for oil happened in spectacular fashion. As recently as 1985, China exported about 142 million barrels of oil. However, in 1993 the country’s demand for oil used up all its domestic production. 

By 2002, the country imported 496 million barrels of oil. As you can see in the chart below, they hit a record high of 1.9 billion barrels in 2013. And daily imports continue to break records.

Again, China didn’t begin to import oil until the 1990s. In less than 20 years, it went from zero to the world’s largest importer. And most of that demand came from its newfound love of cars. 

China’s love of cars provides a growing demand for oil… and will likely place a floor under the price of oil around $80/barrel for years. This is good news for major oil companies like ExxonMobil, Chevron, and Eni (a huge Italian oil firm). An investment with these companies gets a big boost from the numbers I’ve just shown you. 

China may not be growing at 10% a year these days… but it’s still growing enough to propel commodity imports to all-time highs. Tomorrow, I’ll share why this is such big news for two of my favorite precious metals right now… 

Good investing, 

Matt Badiali

Further Reading: 

Saudi Oil Minister Ali al-Naimi said he viewed the increase in U.S. oil production as a new source of supply that will help stabilize oil markets. Oil from shale is providing a buffer against an unsteady Middle East market, but it’s not too early to consider what happens to markets after the revolution.

Naimi said during a meeting in Riyadh with U.S. Energy Secretary Ernest Moniz the increase in U.S. oil production was adding a level of stability to an international oil market unsettled by problems in the Middle East and North Africa.

“It is necessary to continue consultations between our two countries to expand the horizons of cooperation, including joint investments, and working with oil producing and consuming countries for the stability of the global market,” a statement from the official Saudi Press Agency said.

Related article: The Fracking Revolution: Promise and Perils

The U.S. Energy Information Administration said in its short-term market report that production from countries outside the Organization of Petroleum Exporting Countries is expected to increase by a record 1.9 million barrels per day this year. Most of that increase is expected from North America. By next year, U.S. oil production should break a 43-year-old record with 9.3 million bpd.

With a leading consumer producing more of its own oil, Saudi Arabian Oil Co. has the breathing room it needs for Februarymaintenance at its 750,000 bpd Shaybah oil field. Oil production from Saudi Arabia, OPEC’s leading supplier, declined 3.5 percent from the third quarter of 2013 to settle at 9.6 million bpd during the fourth quarter, leaving plenty of room for U.S. production growth.

U.S. oil production gained traction just as Libya’s position in the marketplace fell because of civil war. Nearly three years ago, the International Energy Agency called on member states to release oil from their strategic reserves to offset declines from Libya. With Libya still struggling to return to pre-civil war oil production levels, the conversation is different because of oil from North America.

Without erasing U.S. legislation enacted in the wake of the 1970s Arab oil embargo, crude oil produced in the United States should stay within the domestic economy. By 2035, the United States should be self-reliant in terms of energy, according to BP’s annual economic outlook. But that year may mark the zenith of a brief revolution.

Related article: Lukoil Deal Makes Bulgaria Largest Eastern Europe Refiner

BP said in its report the United States should overtake Saudi Arabia this year in terms of oil production. By Riyadh’s own account, that comes as something of a relief as it addresses changes to its own market dynamics brought on by an increase in regional energy demand. For OPEC as a whole, its share in the oil market declines for much of the decade but recovers by 2020 as U.S. oil production slows down. BP’s report suggests U.S. oil production, meanwhile, falls by 75 percent through 2035.

Decline in U.S. shale production, and the inability of other countries to replicate the success, is not so much validation of peak oil theory as much as it is a return to the status quo, where Middle East and North African producers dominate the market.  BP’s report, meanwhile, said oil shows the slowest growth in long-term market forecasts compared with natural gas. With renewables also gaining strength, a future energy market may count oil as a second-tier fuel source. The shale revolution in the United States, as with any revolution, will be brief. It’s what happens after the revolution ends that matters.

By. Daniel J. Graeber of Oilprice.com

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