The shale gas revolution in the United States has led to a collapse in prices but is too big to keep to ourselves. That is turning natural gas from a domestic market to a global one, and the global demand may cure the current low prices.
The U.S. oil boom has put European refineries out of business and undercut West African crude suppliers. Now domestic drillers threaten to roil Asian markets and challenge producers in the Middle East and South America.
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.
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.