Jim Cramer speculates where the direction of oil prices will go following the OPEC meeting on Thursday. Could we be in a sweet spot for oil?» Read More
We are skeptical this economy (and by “economy” we mean what is near-and-dear to us all, jobs and home values… and most definitely not the stock market) is capable of sustaining oil prices at these levels.
Over the last two months The Conference Board’s sentiment index of American consumer confidence has fallen from a two-year high of 62.7 to a five-month low of 50.4.
“Surprise rise in jobless claims casts pall on the economy”… so read the headline on Reuters. The headline on Bloomberg noted the “unexpected” rise in jobless claims, to a three-month high, no less. Why are headline writers so apparently shocked by this event?
Yesterday (Wednesday), the state Senate in New York threw up a roadblock to the state’s plan to tap into its slice of the Marcellus Shale natural gas pie. The Senate approved a mandate for a moratorium (there’s that word again) on new drilling permits through May 15, 2011, to allow the state to study the effect of hydro-fracking on the water supply.
Informed [sic] political opinion has it that the Democrats will take a beating this November in the mid-term elections. With President Obama’s current approval rating only slightly above that of Tony Hayward amongst likely US voters, it is hard to argue against this view.
Over the last three months, Nymex Henry Hub natural gas futures for prompt delivery have rallied from a low of 3.855 (May 06th) to a high of 5.196 (June 16th). In our opinion the rally through mid-June was predicated for the most part on three key drivers.
Apropos the discussion in Thursday’s issue of The Schork Report, the future is now for $5 gas. The Nymex Henry Hub complex edged to within 1.3% of that benchmark to close last week’s trading. Thus, if we are going to see +$5 then it is going to happen sooner rather than later...
According to the latest Beige Book from the US Fed, a number of businesses in the Gulf Coast region expressed concern about the potential impact on long-term energy production and employment from the deepwater drilling moratorium. The Dallas District was blunter, “contacts in the energy industry said the moratorium on deepwater drilling resulted in significant regional layoffs…”
As of last Friday, July 23, the US Bureau of Ocean Energy Management reported that a total of 11 production platforms, equivalent to 1.74% of the 634 manned platforms in the Gulf of Mexico had been evacuated as a result of TS Bonnie. In addition, two rigs, equivalent to 5.13% of the 39 rigs currently operating in the Gulf were also evacuated. It is thus estimated that approximately 10.4% or 667 MMcf/d of the natural gas production in the Gulf was shut-in...
Regardless of today’s DOE inventory report, crude oil supplies are more than sufficient, as we see in the Chart of the Day in today’s issue of The Schork Report. As of the end of 2009 total crude oil stocks in the U.S. (commercial + SPR) adjusted for population growth was 3.47 barrels. That was the highest ratio since 1993. If we extrapolate current inventories, then the ratio for 2010 rises to around 3.51.
Last week the number of shares outstanding in the natural gas ETF dropped by 3.3%. This decline is interesting given that it occurred as the front two contracts on the Nymex Henry Hub curve slipped back into backwardation. The decline in shares is peculiar given that it now makes sense to own the UNG in order to capture the positive roll.
This month the EIA released its report on the American Power Act of 2010 (APA) which was proposed by Senators Kerry and Lieberman on May 12, 2010. Though conceived before the Deepwater Horizon spill, the APA’s provisions seem strangely prescient in their move away from off-shore drilling.
Since US markets re-opened after the 04th of July holiday, Nymex WTI for September delivery rallied from a 71.47 low (06th-Jul) to last night’s 79.42 high; an 11% rise in twelve sessions. As such, the spot market now finds itself on the precipice of $80 for the second time since the implosion in the price back in the first half of May. At the same time, volatility has collapsed. Bears, beware...
Henry Hub natural gas bulls entered this week at a critical point. This morning we are bound to see an extremely low injection into storage for last week; perhaps below the 50 Bcf threshold. More importantly, from a fundamental perspective, there is apparent concern in the market regarding the nearby availability of molecules.
Consider the situation in Nevada, whose main source of revenue is predicated upon gambling, to the situation in Louisiana, whose main income sources are commercial fishing and oil/gas extraction.
US commercial stocks of crude oil represented as a ratio to total private employment population peaked at 5.3 (i.e. 5.3 barrels of oil to every 1 worker in the private sector) in early 1981 at the outset of the Iran-Iraq war. This ratio began to fall as the war in the Gulf (“Persian Gulf” if you were rooting for Iran, “Arab Gulf” if you were rooting for Iraq) escalated.
In the wake of yesterday's (Sunday's) sub 80 Bcf report from the EIA, spot Nymex Henry Hub natural gas futures rocketed 7.8%. The knee-jerk reaction is not hard to understand...
In the wake of yesterday's sub 80 Bcf report from the EIA, spot Nymex Henry Hub natural gas futures rocketed 7.8%. The knee-jerk reaction is not hard to understand....
According to the American Petroleum Institute (API), domestic oil and gas production activity rose by 38 percent in the second quarter from a year ago. The API estimates that 10,358 oil wells, natural gas wells and dry holes were completed in the second quarter of 2010. These results are in stark contrast to the 22 percent year-on-year decline posted in the first quarter and therefore poke holes in the assumption producers of natural gas are ready, willing and (financially) able to rein in output.
Heading into yesterday’s session spot NYMEX crude oil for August delivery had yo-yoed in between a 79.38 high and a 71.09 low. Yesterday the contract peaked at 76.43 and troughed at 74.52 before settling at 74.95. Suffice it to say, $75 does indeed appear to be a magnet.