The petroleum markets are getting battered by the cold winds of winter. Heating oil futures made a new high for the year and had a hard time deciding whether it should rally on some of the coldest temperatures in recent memory, or sell-off on a forecast that puts most of the eastern half of the United States to back above normal temperatures.
Still the warnings to the Northeast by the Energy Information Administration will hit the pocketbooks of Northeasterners when it comes to electric and natural gas. The EIA warned that full pipelines out East should expect higher prices and higher prices they have received. Reuter News reported that the cold weather in the northeastern United States pushed regional New York natural gas prices to their highest price so far this winter. If the early average of more than $22 per million British thermal units holds for the trading day, it will be the highest average price for regional New York gas prices tracked by Reuters since early January 2008.
Oil seemed hesitant to rally, but a late day rebound in the products caused a modest upside crude oil break-out. Perhaps word of another Islamic terrorist attack in Nigeria or perhaps another competing weather forecast sent the market higher. Yet despite the strength, there seems to be a sense that the market knows that in a seasonal sense it is really on borrowed time.
The Republican Governor of Nebraska, Dave Heineman, approved an alternate route for the Keystone Pipeline that met the stated concerns about the route of the pipeline. The new route avoids the Sandhills but still crosses over the Ogallala aquifer. The approval of the new route will put pressure on the Obama administration to make a decision on approving or denying the pipeline. On one hand they want to be green and the president has spent billions of dollars on green energy. So he now will either have to tell his Labor Unions no to a project that they want very badly or go back to his grinds in the environmental lobby and tell them he really wasn’t as committed to the environment as he seemed to be in his speech.
Libya says that their oil production will continue to make a comeback. Bloomberg News reports that Libya’s Oil Minister Abdulbari Al-Arusi said that Libya will raise their oil production of their light sweet crude to 2 million barrels a day in two years from the current 1.1 million barrels. In the shorter term they plan to up production soon to 1.7 million barrels a day. They have plans to drill 150 wells this year and their export terminal, which has been halted due to labor concerns about their safety and security, could also be restarted soon.