Russia's military buildup and bombing campaign in Syria this week rekindled the security premium in oil prices.» Read More
To borrow a quote from The Producers' Max Bialystock… who do natural gas bulls have to !@#$% to get a break? After all, they had everything going for them yesterday.
We will have to wait until the end of this month for the latest monthly update from the DOE, but suffice it to say, the preliminary (weekly) numbers show inventories of crude oil and petroleum products at the highest levels in over a generation.
Analysts at The Schork Report can easily reconcile why next winter is trading below next summer… but why is October losing ground to November?
Yesterday (Monday), spot gas for September delivery faded the 100-day moving average, 4.389, for a fifth consecutive session. ...Furthermore, the close was the lowest for spot molecules since the week before the US Memorial Day holiday, late May.
Oil bulls must now put up an inspired defense in the mid $70s for Nymex crude oil (WTI) after their latest foray above $80 ended so miserably.
We expect that the moribund employment picture will weigh upon the energies as we move into the fall. Here's an example...
We think it is reasonable to assume that this will wind up being one of the hottest summers on record. And, by “record” we mean one of the hottest of the last 100 years or so in which man has kept (somewhat) reliable records. As far as temperatures go in the first 4,499,999,900 years of the Earth’s estimated existence, it’s anyone’s guess…
Over the last twelve months ended May 2010 (the latest date for which monthly data is available) the DoE reports that total commercial crude oil stocks have dropped by 1.13 MMbbls. That is 40% below what we would have expected based on a seasonally adjusted time series. This is likely the residue of poor demand fundamentals which has resulted in a persistent contango along the Nymex crude oil curve.
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.