In this issue:

 The big news this week is a tentative deal on Iran’s nuclear program that has some pundits speculating on the impact of a flood of Iranian crude exports on the global oil market. In fact, the deal could still collapse next year, and even if it did it would take years to get Iranian production growing again. In the meantime, disruptions in Venezuela, Libya and Iraq give Saudi Arabia the market power it will almost certainly use to keep prices high even as it attempts to derail the comeback by arch-enemy Iran onto the global oil markets.

Longer term, another oil slump is all but inevitable, of course, as a delayed reaction to the current investment boom in increased crude production and a normal part of the commodity cycle. When it comes, lowest-cost, highest-return natural gas producer Antero will not miss a beat, though it will take a while for it to justify the current valuation. But we’ve got time and are sold enough on Antero’s upside potential to buy.

Time is also on the side of Bakken crude producers, with forthcoming pipeline projects likely to alleviate a transportation crunch, erode rail’s market lead and lower crude differentials. We survey the projects that will bring more cheap domestic crude to distant refineries. They promise to add jobs, limit the price of fuel and return a profit for investors. That would be an all-around win, and a windfall for which we can all feel thankful.


Portfolio Action Summary

• Adding Antero Resources (NYSE: AR) to the Growth Portfolio. Buy below $62.  

Commodity Update

Despite the agreement with Iran, the price of West Texas Intermediate (WTI) showed a bit of strength over the past two weeks, trading Tuesday at $93.83 (up $0.79/bbl from two weeks ago). Brent crude dipped on news of the deal with Iran, but actually gained more over the past two weeks than WTI to trade at $110.85/bbl, a gain of $5.04/bbl. The front-month contract for natural gas traded Tuesday at $3.82/MMBtu, up 20 cents over the past three weeks.

Barring a total collapse in the Brent-WTI spread in the immediate future, this is going to be a very good quarter for refiners relative to Q3. While we’re still short of the $22.90/bbl spread of a year ago, the current differential of $17.02 is the highest since the first quarter. Short-term traders should take a look at refiners, especially the variable-distribution MLPs that took a hit after Q3 results were released.

In Other News

• Iran reached an agreement with world leaders to limit its nuclear program in exchange for lighter economic sanctions

• Some pundits speculated that Iran’s nuclear deal could push oil prices down and threaten the US shale oil boom  

• Shares of Petrobras (NYSE: PBR) fell more than 6 percent after Brazilian President Dilma Rousseff resisted a proposal to index gasoline price increases to inflation

• Chevron (NYSE: CVX ) announced it will not proceed with the $10 billion Rosebank oil project, one of the largest new prospects in the UK portion of the North Sea, because of cost inflation in the North Sea sector

• Transocean (NYSE: RIG) signaled softness in the near-term deepwater drilling market, announcing that a third of its deepwater rigs are seeking 2014 work