Oil volatility is back and the bulls are no longer going to get a free ride bought and paid for by our friends at the Federal Reserve. Add to that the fears of a China meltdown based on a credit freeze.
German brewers called on Chancellor Angela Merkel’s government to block the tapping of shale gas by means of hydraulic fracturing, citing industry concerns that fracking could taint the purity of the country’s beer.
Following several years of stronger-than-expected North American supply growth, the shockwaves of rising U.S. shale gas and light tight oil and Canadian oil sands production are reaching virtually all recesses of the global oil market.
The Energy Information Agency shocked the market by reporting that U.S. Crude supply increased by 6.7 million barrels putting supply at the highest level in 82 years. So much for that uptick in gasoline demand.
Why all this interest in the long side of natural gas? Because the hedge funds realize that we are crossing that historic turning point in this market where demand growth expectations will start to outstrip production increases.
While manufacturing reported weakness caused a drop in oil, heating oil led a product comeback. Yet it was natural gas that quietly closed above $4.00 that was perhaps the most interesting move of the day.
In the past when OPEC’s back has been against the wall, like the late-1990s, energy prices and demand rebounded to save them from the ash heap of history. Yet this time may be different. Why? Because OPEC is not the only game in town!
A glut of government-subsidized wind power may help accomplish a goal some environmentalists have sought for decades: kill off U.S. nuclear power plants while reducing reliance on electricity from burning coal.