CNBC's Jackie DeAngelis discusses the day's activity in the commodities markets.» Read More
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.
If ever there were a time for natural gas to rally, you would think it would be now. Gas-fired cooling demand in key market areas has been surging since May; a circumstance that looks to remain through at least the end of July.
Back in the June 16th Schork Report we talked about the peculiar action transpiring in the Nymex Henry Hub back spreads. For instance, in between May 06th and June 15th, the backwardation for the key cross-seasonal March 2011/April 2011 spread spiked by 204%. Recall, this was the purported trade that drove a $9 billion hedge fund (Amaranth) into extinction.
In light of the current heat wave that is roasting much of the U.S., cooling demand this season is already drawing comparisons to 2002. For that season, June to August, the average temperature for the contiguous United States was the warmest since the 1930s.
In the lead up to the US 4th of July holiday, i.e., the start of the peak driving season, the forward curve of the Nymex gasoline complex is in contango for the first time since the 2007 season.
Yesterday the French oil giant Total SA, announced it has suspended selling refined oil products to Iran. The decision by the company was in response to the approval last week by the US Congress to level sanctions against foreign companies that trade with Iran. This is important, according to the latest estimates from the EIA, Iran’s refining capacity is around 1.5 MMbbl/d, but its domestic consumption is closer to 1.7 MMbbl/d.
Last Monday’s issue of The Schork Report highlighted telltales that seemed to suggest that the crude oil markets in London and New York were gearing up for an upside breakout.
Earlier this week we ushered in the summer solstice, which also means that the “dog days of summer” will soon be upon us. The name originated with the ancient Greeks, Romans, and Egyptians; they believed that Sirius, the dog star, which rises simultaneously with the Sun during this time of the year. In this vein, injections will begin to ebb over the next several reports...
The oil products complex was quiet yesterday on the Nymex in advance of today’s DOE inventory data, but one contract showed consistent strength relative to the others — RBOB gasoline. Its highs were higher and its low prints were less low in relative terms due to surprisingly strong vehicle miles travelled data.
On Friday, the US State Department released a chart of international offers of assistance for the Deepwater Horizon catastrophe. Outside of accepting minor assistance, the chart clearly shows that the U.S. government has by-and-large, declined international offers to help stem the flow of oil towards the U.S. coast, including vessels. Why?
writes Stephen Schork.
In Tuesday night’s address to the nation President Obama reminded us, again, that “…we will make BP pay for the damage…” Yawn. Now that we have coerced a blank check from BP, will you please tell us what else we are doing?
In the Chart of the Day in today’s issue of The Schork Report, we plotted the return on holding inventory, as measured by the cross-seasonal Mar/Apr spread against EIA underground natural gas storage. Demand can be inferred from the trendline running through the data points of the spread and EIA estimated storage.
We have no gripe with the way this administration is handling the situation in the Gulf. Hold your laughter — we are serious...