A Weekly Recap of All Things Resources to Friday, August 18th

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‘That’s a Wrap’

By Rod Blake

After two weeks away hitting golf balls into the endless skies of southern Saskatchewan, I returned to see the resource markets in much the same state as when I left. That is, most resource prices save for – crude oil that reached a new 9-month high near US$85 per barrel – were flat as were the prices of most resource stocks. However, aside from the flat prices of resources and resource companies – I was happy in that not many junior resource companies were putting out news in this market.

The way I see it – As a broker or investor, I dreaded when the companies I followed put out positive news during the Summer Doldrums season of July and August, as for the most part, the news would fall into a black hole of disinterest as most investors were either physically or mentally away from the markets. Unless the news was exceptional, it was almost impossible to generate the trading volumes needed to move the stock higher. I always hoped that the companies could somehow tie their news to come out in early September when the market was far more receptive.

Occidental Petroleum Corp. ‘OXY-N’ was so impressed with how Carbon Engineering Ltd. (CE) carbon capture technology worked on a joint venture project in Texas that the giant American energy company decided to buy Squamish, BC based CE in an all-cash deal of US$1.1-billion.

Suncor Energy Inc. ‘SU-T & N’ share price fell by $0.49 or 1.16% to $41.91 after Canada’s largest integrated energy company’s 2nd-quarter financials failed to compare to the previous year’s same quarter financials when the Russian/Ukraine war had crude oil prices north of US$100 per barrel.

Giant American energy infrastructure company Energy Transfer LP ‘ET-N’ (ET) and like company Crestwood Equity Partners LP ‘CEQP-N’ (CEP) agreed to a merger that will see ET take over CEP in a stock & debt deal of some US$7.1-billion.

The influential Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs fell by 12-rigs over the past week to 642, down by 120 from this time last year. Up north – the number of Canadian active rigs fell by 1-rig to 189, down by 12 from a year ago.

Fishers know that you have to set the hook in order to bring in the fish and it would seem that executives of B.C. Hydro have learned from the fishers. After some 10-years of enticing drivers of the low cost of operating electric vehicles (EV) – to the point where now over18% of light-duty vehicles sold in BC are EVs – the giant Vancouver, BC based utility now says it needs to raise EV charging rates by 15% to help recover charging station costs.

Teck Resources Ltd. ‘TECK.B-T’ & ‘TECK-N’ shares’ rose by $1.96 or 3.89% to $52.32 on word the India’s JSW Steel was looking to buy up to 75% of the Vancouver, BC based company’s coal operations in southeast British Columbia.

A consortium of Ford Motor Co. ‘F-N’ and South Korean companies announced their intent to build a $1.2-billion plant in Becancour, Quebec to produce electric vehicle (EV) battery materials for Ford EVs.

The price of lithium fell to a new 3-month low of US$32,092 per tonne.

Gold bullion fell to a new 5-month low of US$1,889 per troy ounce.

Followed by the TSX Venture Exchange, which sank to a new 7-monrh low of 586.

Conversely, the CBOE Volatility Index or VIX approached a 3-month high just above 18.

Surprises to the upside – petroleum service company Trican Well Service Ltd. ‘TCW-T’ stock price rose to a new 14-month high of $4.73 while Canadian uranium giant Cameco Corporation ‘CCO-T’ & ‘CCJ-N’ shares’ reached a new 16-year high of $46.95.

After a mostly lacklustre week – the markets generally traded lower going into the weekend.

For the Week – the DJI lost 2.21% to 34,501 with the S&P 500 down 2.11% to 4,370 and the NASDAQ off by 2.59% to 13,291. In Canada – the TSX lost 2.89% to 19,818 and the TSX Venture fell 3.46% to 586. The CBOE Volatility Index or VIX rose by 16.58% to 17.30.

With currencies – the Canadian dollar lost 0.77% to US$0.7382 as the U.S. dollar ‘DXY’ rose by 0.52% to 103.42.

With commodities – gold bullion lost 1.25% to US$1,889, with silver down by 0.44% to US$22.77, as copper fell by 0.27% to US$3.70, and lithium dropped 8.50% to US$32,092. Crude oil lost 2.20% to US$81.38 while natural gas fell 0.72% to US$2.57, while uranium rose by 1.33% to US$57.00. With soft commodities – lumber gained 7.69% to US$532. Overall – the CRB Commodities Index was down by 2.33% at 307.

One Last Thought – Just when one thinks that the bureaucracy of government can’t get any more excessive they prove you wrong. Case in point – the Australian government recently announced it has hired a consultant to consult on how best to deal with other…..now wait for it….consultants.

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