Hey Russia! What about that natural gas cartel you were talking about with Iran! Remember how Iran tried to get you to buy into an idea of a natural gas cartel so you could teach us a lesson here in the good old natural gas deprived USA! How you would scheme to use your natural gas production dominance to your influence to send us a nice gentle message like you send to the Ukraine and the rest of Europe! Well forget about it! According to the Energy Information Agency, as reported by Reuter’s News, it seems that the United States will overtake Russia as the world’s largest producer. Take that my Russian friends. While Europe may debate the merits of fracking, the US with its increase in unconventional supply will now be less impacted by another far off energy cartel.
Of course this does not mean that we may not need to import natural gas but most of it will come from our friendly Canadian neighbors. Well friendly except when it comes to hockey or when our President blocks an oil pipeline for political reasons. Instead of having to bow to a Russian gas cartel, according to the Energy Information Agency, our increase in natural gas production will have us on a path to use gas to replace coal as the top choice for the US power industry! The IEA expects total U.S. gas production to rise from 653 billion cubic meters (bcm) in 2011 to 769 bcm in 2017, while Russian gas output is expected to rise from 659 bcm last year to 757 bcm over the period. U.S. demand is also expected to surge from 690 bcm last year to 779 bcm in 2017, as a slump in prices over the last few years encourages U.S. industry to use more.
For oil everything is all right until it is not. Oil was held in suspended animation trying to decide exactly what if anything would be done to save the Eurozone. As the day wore on, the strong ISM nonmanufacturing number and short covering helped oil start to bottom. Australia helped the rebound overnight with a stunning 4.3% growth rate. No wonder they only cut rates by 25 basis points. Yet disappointment that the ECB left rates unchanged may take away some of the momentum! What the heck is Draghi thinking?
Oil should see a draw in today’s supply report. The American Petroleum Institute showed that, "API Says U.S. crude oil inventories fell 1.76 mln barrels, U.S. gasoline inventories rose 1.40 mln barrels and distillate inventories rose 1.82 mln barrels."