The natural gas got a boost on weather but in reality the bigger boost may come from President Obama's new Energy Secretary. President Obama's choice of Ernest Moniz to lead the Department of Energy may be a signal to the gas market that indeed the U.S. will start along a path of sharing our natural gas abundance with the world and start exporting it. Dow Jones reported that Moniz, a nuclear physicist of Portuguese descent, served in the Energy Department under President Bill Clinton. He is the director of MIT's Energy Initiative and sits on Obama's council of scientific advisers. If confirmed, Moniz would play a role in deciding whether to allow energy companies to export U.S. natural gas. In his current role, Moniz was the co-chairman of a 2011 study that found "there are substantial economic benefits to a global natural-gas market" and said "the U.S. should not erect barriers to natural gas imports or exports."
As readers know I have been predicting that natural gas has put in a longer term bottom based upon low prices creating demand. Now it appears that the biggest holder of U.S. natural gas reserves, Shell oil, agree. As reported in Zero Hedge, Shell is predicting that Natural Gas will become the number one energy source in the world.
"With high government involvement in dictating energy and policies, Shell believes that natural gas will flourish to become the number one energy source in the world over the next couple of decades, overtaking coal and helping to reduce carbon emissions. Zero Hedge reports that Royal Dutch Shell has just released new forecasts for its 'New Lens Scenarios' program, which aims to predict how current business decision and policies may unfold over time and affect the markets in the future.
It also predicts that hydrogen and electric power cars would become the common methods of transportation and as a result oil prices will drop. This in turn will mean that high-cost unconventional fossil fuels would remain in the ground as it would be economically unfeasible to extract them. Of Course in the short term oil is rebounding on global economic nirvana.
Stimulus and the fact that crude filled its gap is giving the market support. The gas bubbles has burst and the cold temperatures could bring back heating oil.
Bloomberg reports that gas at the pump, averaged nationwide, fell 0.9 cent to $3.746 a gallon, AAA said today on its website. It was the sixth consecutive drop. Prices, which have risen 14% this year, are 7 cents below a year earlier. Prices in 2012 peaked on April 5 at $3.936 after climbing every day but one from March 8.
Still the downside now is limited and now the question is when oil will start to establish a base for its seasonal spring run. We should see choppy action in oil over the next couple of days as we try to find a bottom to work with.
Brent crude has been strong due to North Sea problems. Bloomberg report that Buzzard may be coming back on line but the TAQA pipelines remain down.