Natural gas looks to vehicle conversions for long-term support

Natural Gas Flash

Widespread adoption of so-called NGVs would increase U.S. gas consumption. If 10% of U.S. vehicles used the fuel instead of gasoline or diesel, natural gas use would climb by 6 billion cubic feet a day, or 8.5% of current demand, according to Tudor, Pickering. "That is huge,” Pursell said. "I think it's going to happen, but the big question is the timing.”

Growing use of natural gas vehicles may cut global gasoline and diesel demand by 1.5 million to 4.5 million barrels a day, Martijn Rats, an analyst at Morgan Stanley in London, said in a note to clients dated April 16.  U.S.-marketed gas output may climb 0.3% this year to an all-time high of 69.3 billion cubic feet a day amid rising shale supplies, Energy Department data show. Production grew 34% from 2005 to 2012. The drilling boom allowed America to meet 84% of its energy needs last year, the highest level of self-sufficiency since 1991.

Crude and heating oil on the Nymex have more than doubled from crude's 2008 low amid a U.S. economic recovery, rising demand from China and concern that Mideast violence may curtail supplies. Heating oil prices are used as a proxy for diesel.

"‘With compelling economics for many vehicle owners and a large number of industry initiatives in place to stimulate take-up of natural gas, we foresee further growth in the global NGV fleet, despite some of the obstacles,’ Rats said” A must read in Bloomberg!

The Oil market looks to the Fed. The driving force behind the market right now is economic policy!  To print or not to print? That is the question. With inflation tame bordering on disinflation the odds are raising that the presses both in Europe and the United States will continue to roll. Eurozone unemployment hit another record high hitting 12.1%. Inflation slowed to 1.2% to 1.7%. The ECB has no reason to not lower rates.

The Fed has to be careful as well because economic data is not all it is cracked up to be and instead of trying to signal an exit strategy they may want to think of another growth strategy. Getting scary!

The FT reports that “U.S. crude oil exports are flowing at the fastest rate in more than a decade in the latest sign of how the shale revolution is redrawing the world energy map. Foreign-bound shipments of U.S. crude totalled 124,000 barrels per day in February, matching levels last reached in 2000, the U.S. Department of Energy revealed in monthly data. All the exports went to Canada, the only destination where approval for exports is almost automatic under U.S. law.” A must read.

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About the Author
Phil Flynn

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn@pricegroup.com. Learn even more on our website at www.pricegroup.com.

 

Futures and options trading involves substantial risk of loss and may not be suitable for everyone. The information presented by The PRICE Futures Group is from sources believed to be reliable and all information reported is subject to change without notice.


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