Emerging market, what emerging market? The Fed in a rare unanimous decision decided to go full speed ahead, emerging markets be dammed, and went ahead and tapered without acknowledging emerging market turmoil. That turmoil may be getting worse after China posted a worse than expected manufacturing data as it is coming out of the shadows with its shadow banking system. After bailing out a high yield fund, fears of that China's system could unravel in a world of rising global interest rates. China's purchasing managers index fell to 49.5 from 50.5 in December, HSBC Holdings Plc and Markit Economics said in a statement today. That is not helping market sentiment and is having everyone wonder if at Janet Yellen's first chair they may have to hold the taper to provide cover for an emerging world that may be spinning out of control.
Yet in the petroleum markets it was better than expected demand for products due in part to weather but also a surprising increase in gasoline (NYMEX:RBH14) demand that kept the market from falling apart after a much larger than expected increase in crude supply. Crude (NYMEX:CLH14) supply magically appeared in the Gulf Coast as the EIA stats got more in line with the API and what we had been expecting to see last week. The EIA reported that crude supply increased by 6.42 million barrels led by a 4 million plus build in the Gulf. Yet a big drop in distillate of 4.58 million barrels and a surprise 819,000 drop in gasoline supply supported the complex against a tapering Fed and a Turkish blood bath.
For natural gas (NYMEX:NGH14) it was expiration desperation. Short sellers that underestimated demand growth and Mother Nature got crushed in an epic short covering supply squeeze( see my article in Futures) http://www.futuresmag.com/2014/02/01/the-natural-gas-economy-is-a-long-term-play
For over a year we have been saying that the warmer than normal winters and cooler than normal summers have masked expansive demand growth and increasing exports challenging the relatively slower movement on the infrastructure front. What is more, winter is not over! Another polar vortex is on its way! Bundle up baby this ride is not over!
Obviously this has taken its toll causing propane shortages. Are energy companies gouging?