CNBC's Jackie DeAngelis discusses the day's activity in the commodities markets.» Read More
The quote above demonstrates how extreme tensions have become regarding Libya. Warplanes are said to be strafing protestors in Tripoli, the capital, while Benghazi, the second largest city, is said to be in the hands of the insurgency.
With the recent turmoil across North Africa and the Gulf, investors are now becoming increasingly concerned that the ‘political contagion,’ as the wave of upheaval has come to be known, may flow over into Saudi Arabia as well.
Pundits have recently been talking about stocks at Cushing, OK and the effects of the Keystone pipeline. They have also been talking about the widening front month spread, which recently crossed below the -$4.00 barrier for the first time since May 2010. However, there is a less discussed effect of Cushing that takes place much further along the curve, writes Stephen Schork.
Crude oil prices in New York jumped 2% in 30 minutes after reports broke regarding Iran’s intent to send two naval gunboats through the Suez Canal en route to Syria, writes Stephen Schork.
As noted in recent issue of The Schork Report, the movement of crude oil in the U.S. in the fourth and first quarters exhibit distinct patterns at the refinery epicenter in the GoM (PADD III). At the end of the fourth quarter inventories are usually purged in accordance with end-of-year tax reporting purposes. This flush typically produces a considerable draw in the month of December, writes Stephen Schork.
Last week’s WikiLeak’s dump regarding oil production estimates for Saudi Arabia reintroduced the notion of peak oil to the popular discussion. By peak oil we are talking about the high-water mark, as assumed from the Hubbert curve, of global oil production, writes Stephen Schork.
Last week the EIA released its latest Short Term Energy Outlook. The big ticket numbers include WTI averaging $93 per barrel in 2011, gasoline prices at the pump averaging $3.15, and household expenditures on electricity remaining flat. Our focus today is on natural gas, with Henry Hub prices expected to average $4.16 per MMBtu in 2011, $0.22 below last year’s average, writes Stephen Schork.
We are becoming wary of connecting forecasts with market reactions. Consider that since the start of December, the delivery has exceeded analyst expectations for seven out of the ten reports. Yet on the day of the release, prices have fallen for eight out of the last ten weeks, writes Stephen Schork.
Per the latest WikiLeaks dump, Sadad al-Husseini, a former geologist for the Saudi state-owned oil company, Aramco, stated in diplomatic cables dated between 2007 and 2009, that the oil kingdom may have overstated its oil reserves by as much as 40 percent.
Yesterday, the Chinese government announced its third interest rate hike since October. The rate on the 1-year lending rate from the Bank of China will increase 25 bps to 6.06%.
Yesterday’s issue of The Schork Report stated that during last week’s trading “the bulls failed to hit [natty front month’s 50 day moving average of 4.373] on Friday which could lead to a technical sell-off this week.” Yet we were still surprised to see the severity of yesterday’s ~5.00% drop to 4.104, writes Stephen Schork.
Since the start of the winter, the spread between the Nymex Henry Hub natural gas futures contract for March 2011 delivery and the April contract has morphed from a premium (backwardation) of 0.9%, to a discount (contango) of -0.7% as of last Friday. The spread has been yo-yoing around unchanged all winter long.
If we adjust the price for the rise in the cost of living, then a 1966 gallon of gasoline should be worth around $1.00 in 2010.
Natural gas production in the Lower 48 U.S. has now increased in 9 of the first 11 months of 2010 per the government’s latest numbers, EIA-914, writes Stephen Schork.
Consumers are spending 3.8 cents of every dollar at the pump—is this sustainable?
Since switching our bias in the liquids and gas two Fridays ago the markets have been on a rollercoaster… more so than usual, writes Stephen Schork.
Since the end of last year the amount of net length held by money managers in the NYMEX WTI crude oil market dropped from a record 202,221 contracts to 155,487 as of last Tuesday, writes Stephen Schork.
Whereas oil inventories in PADD III always go missing in the month of December, they always seem to reappear (wink, wink... nudge, nudge) in January.
Oil, so far, has not reacted to news of anti-government protests in Egypt, but oil traders are keeping a wary eye on the political situation there and in Yemen for signs it could spill into other parts of the region.
Yesterday (Wednesday), the DOE reported a 4.84 MMbbl build in crude oil inventories, blowing away analyst expectations of a 1.2 MMbbl build. The API had reported a (comparatively better) 2.12 MMbbl build on Tuesday night, and last year saw a 3.89 MMbbl draw for the same timestep, so surely the DOE’s number incited a sell-off, right?