Crude oil: Crude oil prices look to Asia as those markets start the week off a bit shaky. Oil looks as it is getting ready to have a substantial breakdown yet it continues to hang around failing to decisively breakdown. That might be because the market believes in Ben Bernanke. The Fed is getting ready to kick off a two day meeting. The oil market seems to believe that the Federal Reserve will send signals that it's easy money policies will continue. Remember in recent years actions by global central banks have caused the biggest moves in oil than any other factor.
Bloomberg reported "The yen strengthened and emerging-market stocks dropped as Chinese industrial companies reported slower profit growth. U.S. equity-index futures retreated before a report on pending home sales, while European shares rose. Japan's currency appreciated 0.5% to 97.77 per dollar at 6:18 a.m. in New York, climbing for a third day and touching a one-month high. Natural gas declined to a four-month low and oil slid 0.2% to $104.51 a barrel. The Shanghai Composite Index dropped 1.7%. Standard & Poor's 500 Index (SPX) futures lost 0.3%, while the Stoxx Europe 600 Index increased 0.2%. Net income at Chinese industrial companies rose 6.3% in June from a year earlier, data showed on July 27, down from 15.5% in May."
Of course, Egypt still is in play. A major crackdown on the Muslim Brotherhood is creating unease in the Obama Administration. That is giving Brent crude oil some support. This comes as peace talks restart between the Israelis and Palestinians.
Natural gas: Tropical Storm Dorian weakened and lost its name causing a sizeable drop in natural gas prices. As of now, according to the National Hurricane Center the storm has a 50% chance to regain its status as a Tropical Cyclone. The downgrade of Dorian means a downgrade to natural gas. Call it the Dorian downgrade bonus. Earth Sky Science News reports "the storm has plenty of open water to traverse through before reaching any bodies of land. However, the general movement of the storm takes it near Puerto Rico, Dominican Republic, Haiti, and possibly into the Bahamas. The storm has been having trouble staying organized, as it fights wind shear and dry air. There is a high chance that this system will not hold together. Regardless, Dorian should still be watched."
Big picture: natural gas demand continues to rise. Reuters reports "that U.S. power companies have shut or converted over 15,000 megawatts (MW) of coal-fired power plants since 2009 and have plans to shut or convert another 35,000 MW over the 10 years or so. Cheap natural gas prices and strict environmental rules have made coal the more expensive option in some areas. Eventually, the switch away from coal may shut 60,000 MW to 100,000 MW of power generation across the country, according to industry estimates. In 2012, low gas prices from record shale production depressed power prices to at least 10-year lows, making it uneconomic for generators to install new environmental controls on their oldest and smallest coal plants. Those controls are needed to keep the units compliant with federal environmental rules proposed since President Barack Obama took office in 2009. There are about 318 gigawatts (GW) of coal-fired power plants in the United States, about 30% of the nation's 1,051 GW generation fleet. The share of generation fueled by coal in 2013 is expected to rise to 40.1% from 37.4% in 2012, then hold at 40.1% in 2014, according to the U.S. Energy Information Administration's (EIA) short-term energy outlook in July. Coal produced over half of the nation's power as recently as 2003. EIA projected the share of generation fueled by gas in 2013 will average about 27.6%, down from 2012's average of 30.4% on forecasts that higher gas prices will prompt generators to burn more coal. In 2014, EIA projects gas used in power generation will slip to 27.3 %."
On a sad note, the man that changed the energy world as we know it has passed away. That " George P. Mitchell, a billionaire philanthropist credited with making the extraction of natural gas from shale rock commercially viable using the innovation of hydraulic fracturing, died at the age of 94 on Friday. His family said the death was from natural causes. A native of Galveston, Texas who came from meager means, the petroleum engineer was the chairman and chief executive officer of Mitchell Energy & Development Corp, which was sold to Devon Energy Corp. for $3.5 billion in 2002. Mitchell drilled for natural gas in a rock formation known as the Barnett Shale in north Texas where the first successful application of hydraulic fracturing, also referred to as fracking, resulted in the viable production of natural gas. Fracking, in which sand, water and other fluids are blasted into rock formations at high pressure to unlock trapped oil and gas, has vastly changed the nation's energy supply outlook. The rapid growth in crude production from shale has led some to predict North America could be energy independent by the end of this decade.