logi Energy - Larry Ortega CIO/CEO

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logi Energy - Larry Ortega CIO/CEO
Peak Oil Analysis

• Thoughts on Oil
• The Thinking Process - December 2009

212 655-4467 larry_at_logipeakoil.com
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Analysis Approach - Strategic Steps
Oil Price Analysis
Oil Price Direction
Strategies
Positions
Position Hedging
Portfolio Hedging
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Oil Price Analysis - The Bases of Direction

• Current Global Production
• Global Export Modeling
• EIA Data Analysis
• Detailed Futures Pricing Analysis
• Oil Price - Market Effects
• Elliott Wave - Fibonacci Analysis
• Technical Chart Analysis
• Weather Analysis
• Industry Insights EP as well as Transportation
  Operations

Oil Prices Where are we in the Oscillation
Cycle?
5 Person Technical Analysis Team Insights from
all 15 Team Members
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Oil Export Model 2005 On - Peak Oil Analyses

• Supply and Demand Cross in 2032 Best Case
  (Upper Chart)
• Oil Supplied by Exports Expected to Drop at
  roughly 1 MMbpd per year (Lower Chart)
• Within 2 years, it will drop below World Demand
  at the Currently Depressed Usage Rates
• Within 5 years, there will be Fuel Rationing in
  the US, Europe and Japan

Exports SHOULD meet Needs for Next 2 Years
Source Multiple sources compiled by Samuel
Foucher and Jeffrey Brown
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Oil Price EIA Data Seasonal Effects

• Crude Oil and Gasoline beginning Fall/Winter
  Build at Extreme Highs Inventory only to get
  worse (Upper Graphs)
• Heating Oil Winter Drawdown Starting at 99th
  tile. Warm Winter could spell even Higher
  Inventory
• El Nino Strengthening MORE than expected.

Crude Oil and Gasoline Reserves Expected to Grow
if There is Lack of Use
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Oil Price Market Effects - USO, Oil Comm ETF

• Slowly Crumbling from Oct High - Biased by
  Trading Strategy of this ETF
• Technical Indicators Percentage Price Oscillator
  and Chaikan Money Flow show Weakening

Downtrend
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Oil Price Market Effects - UNG, Nat Gas Comm ETF

• Seasonal Drop from Oct High - Winter Cold Snap
  causing bounce back, also Biased by Trading
  Strategy of this ETF
• Technical Indicators Percentage Price Oscillator
  and Chaikan Money Flow show Lack of Strength

Still Downtrend
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Oil Price Market Effects - SPY, SP 500 ETF

• Santa Claus Rally Driving into ascending triangle
• Technical Indicators Percentage Price Oscillator
  showing Uncertainty and Chaikan Money Flow shows
  Growing Strength

Clear Uptrend - But, Hit a Limit by New Years?
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Oil Price Market Effects - UUP, US Dollar ETF

• Dollar Spikeback - Not Strongly Correlated with
  Oil or Gas Price, but having an effect - More
  Correlated to SP and Gold
• Technical Indicators Percentage Price Oscillator
  and Chaikan Money Flow show Growing Strength

Clear Uptrend
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Oil Price Market Effects - GLD, Gold ETF

• Market Forces Spiking Gold Down - Not Strongly
  Correlated with Oil or Gas Price - More
  Anti-Correlated to Dollar
• Technical Indicators Percentage Price Oscillator
  and Chaikan Money Flow show Decreasing Strength

STRONG Reversal
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Oil Price Market Effects - DIG, Oil and Gas
Stock ETF

• Oil and Gas Stocks Breaking through Bottom of
  Upward Channel - Bounce back points to lower
  prices
• Technical Indicators Percentage Price Oscillator
  and Chaikan Money Flow going strongly negative

Down Spike Imminent?
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Oil Price Futures Pricing - Crack Spreads -
Broken

• Gasoline and 321 Crack Spreads broke down in
  late August with excess storage
• Crack Spreads hitting Resistance
• Crack Spreads this low means Refinery Margins are
  thin and trying to rebound with weather and
  Christmas Driving

Crack Spread Leading Indicator of Prices
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Oil Price Elliott Wave - Monthly

• Tracks Fibonacci Based Elliott Wave Responses
  Caused by Behavioral Market Responses
• Monthly Wave Analysis Expects Price to Drop below
  Dec08 Low
• Expects Succeeding Up Price Move to go up to 300
  to 400 per barrel
• Elliott Wave Theorists - DO NOT BELIEVE in Peak
  Oil
• Predicted Dow 10,000 SP 1100 in March 2009
  during Low
• Elliott Wave most accurate at describing turn 1
  to 2 wks after

Elliott Wave Predicted 120 or more Oil at High
and 45 or less Oil at Low
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Oil Price Technical Analysis
2002 - 2007 Long Term Support - Resistance
2008 - 2009 Short Term Support - Resistance

• Oil Price Action
• Just Below Short Term Support Line

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Oil Price Weather Effects

• El Nino Strengthening MORE than expected
• El Nino (temp gt1deg) was expected to peak at
  1.25 deg, now modeled to 1.75 deg
• Temperatures MUCH Warmer

• El Nino Strengthening MORE than expected
• Winter Expected to be warmer through March

HO Reserves Expected to Grow with Lack of Use
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Oil Price Industry Insights

• DOT Airline Passenger Seat Miles Down -9.3 over
  Last 2 Years
• Trucking Firms reporting -5.2 in Oct09 from
  Oct08. This was truck Tonnages lowest decrement
  since Nov 2008 Sep 09 was -7.3 from Sep 08.
• American Association of Railroads reports Rail
  Tonnage down -13.7 compared to 08 and -18.2
  since 07
• Dow Jones Transportation Average - Triple Top,
  Third Top Not as High as Second.

No Uptick in Transportation Expected Overage in
Supplies not Needed Supplies Will Continue to
Build
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Oil Price - Direction Bias next 6 Months

• Current Global Production Down
• Global Export Modeling Neutral
• EIA Data Analysis Down
• Detailed Futures Pricing Analysis Neutral
• Oil Price - Market Effects Down
• Elliott Wave - Fibonacci Analysis Down
• Technical Chart Analysis Possibly Down
• Weather Analysis Down
• Industry Insights EP as well as Transportation
  Operations Down

Oil Prices Where are we in the Oscillation
Cycle?
Price Seems to be in the Middle Direction Bias
Pointing Down - Market Headed Down
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Contact

• Larry Ortega
• Chief Investment Officer
• logi Energy
• 212 655-4467
• larry_at_logipeakoil.com

This is not an offer to sell any fund or
securities. Before you invest in markets, please
discuss your decisions with your financial
advisor.