Given that we have been short WTI a heck of lot more times than we have been long on it this year, that question almost seems absurd to us.
As Mr. Bernanke observed, interest rates would likely rise on a disruption to the U.S.’ debt obligations. However, political brinkmanship notwithstanding, interest rates are about to rise anyway. For instance, China has lost its appetite for U.S. debt (especially short-term debt) since the Fed went ahead last fall with a second round of quantitative easing.
Natural gas production in the Lower-48 U.S. rose for the first time this year to finish the first quarter. The net storage position finished March at a 4.68 Bcf/d surplus. That was the highest high in three seasons.
Before the bulls get carried away, they should keep in mind that given aforementioned fissures, what’s necessary for OPEC is no longer necessary for its members.
By all accounts — OPEC’s Monthly Report being one of them — the cartel called OPEC is producing around 29 MMbbl/d. OPEC calculates 2011 demand for its oil to average 29.9 MMbbl/d. Thus, in the simplest of terms, the Group needs to raise production by upwards of 1.0 MMbbl/d to balance demand.
The string of poor economic headlines in the U.S. continued unabated last week. The S&P/CaseShiller Housing Indices and the May jobs report bookended another grim week; a week that issued daily telltales that the pace of the U.S.’ economic recovery is in serious doubt. Home values (the largest single investment for most consumers) are down and job creation is stagnant.