Some Thoughts on the Energy Commodities for 2006

By: Bonneuil Report | Wed, Feb 8, 2006
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Just some thoughts on the various major energy commodities - uranium, crude oil, natural gas, coal, and sugar/corn. Long-term technical trendlines and other long-term technical indicators for these commodities are still overall bullish, and there are some additional fundamental supply and demand considerations worthy of attention.

First of all, in the event that the US heads into a recession later this year due to a slowing housing market correlated to slowing consumer spending, which could likely translate into a slowing demand for energy commodities, the potential exists for rising energy commodity prices if the decline rate in supply exceeds the decline rate of slowing demand. This scenario of rising prices even in the case of a recessionary environment happened during the 1970s. In today's environment, this scenario could also be likely given the global decline rates of peak oil and if Asia or other parts of the world continue to grow as non-US consumer consumption and spending continues to develop worldwide. And this scenario could likely be the case in today's environment for declining or tight supply situations for uranium, crude oil, natural gas, and sugar - coal production has been ramping up after prices doubled recently [1], and corn is not being used as extensively as sugar in the production of ethanol as yet and has had recent associated issues relating to bird flu concerns and large overproduction yields.

Other specific considerations on the energy commodities include the following.

On uranium:

The long-term trendline for uranium commodity prices continues to go higher in an almost parabolic fashion since 2001, as shown below (courtesy of; note that the increase is steady with virtually no correction in price.

Ways of investing in uranium include but are not limited to:

On crude oil:

The long-term trendline continues to go higher as shown below (courtesy of

On natural gas:

The long-term trendline shows higher natural gas commodity prices going higher since the fall of 2004, and the recent selloff in prices has now reached this long-term trendline, suggesting a potential buy point

Ways of investing in crude oil and natural gas include but are not limited to:

On Coal:

The long-term trendline in coal prices still appears to be higher per below (per courtesy of since the summer of 2003.

Ways of investing in crude oil and natural gas include but are not limited to:

On Sugar:

Sugar prices have tripled in the last two years; the long-term price trend appears higher as shown below (courtesy of ). However the recent steep run up in sugar prices suggest a correction may be warranted...this correction may bring prices back in line towards the long-term trendline per the above...some partial profit taking may be considered.

Corn as mentioned has not risen in a similar sense to these other energy commodities - however, given recent public discussions, initiatives, and increased awareness of corn-based ethanol (used for ethanol [7]), the situation for corn could present itself in a manner similar to sugar. North America currently focuses on corn in the production of ethanol.

Ways to invest in sugar or corn, sugar-based ethanol, or corn-based ethanol include but are not limited to:

In addition to the above considerations, it is recommended to begin considering investments in alternative energy technologies utilizing one or more of these energy commodities or in their transformation. Some developments in this regard include but are not limited to:

[3] (Financial Sense Newshour January 2006)
[6] and recently
[7] and recently


Bonneuil Report

Author: Bonneuil Report

The Bonneuil Report

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