Skip to content

Post Election Market Reaction

Summer NAPE

$1 Handle in Natural Gas

GOP Race – 2012

Compliments of Real Clear Politics.

Monday January 9

February crude settled up $.025 to $101.31 and remaining fairly flat, as the market weighed worries about the euro-zone debt problems and tensions between Iran and the West. The market is refocusing on the sovereign debt crisis in Europe on worries that the bailout of Greece is unraveling, as German Chancellor Merkel and French President Sarkozy meet to discuss their latest initiative to contain the debt crisis. On the other hand, Iran continues to provoke the West, announcing that it is enriching uranium at a second facility, and an Iranian court sentenced an American citizen to death for allegedly spying for the CIA. U.S. officials condemned both developments. Meanwhile, traders and analysts are also watching developments in Nigeria, where a nationwide strike is under way against the end of fuel subsidies. So far, the strike has not had an impact on trade.

 

February natural gas settled down $.052 to $3.022 as weather forecasters continue to predict above-average temps over the next several weeks. The market remains weather-dependent as the storage surplus continues to expand. No other market-moving news to report.

Friday January 6

February crude settled up $.025 to $101.56 following the equities markets despite positive jobs numbers, in part on a strengthening dollar against the euro. This morning, the Labor Dept. reported that nonfarm payrolls for Dec. rose by 200,000, with an increase in the private sector of 212,000 jobs, and a reduction in the unemployment rate to 8.5%. However, the November increase in jobs was revised downward and the Dec. growth is largely attributable to seasonal hiring. Meanwhile, investors are keeping a close eye on the Persian Gulf after Iran ratcheted up tensions by threatening to close the Strait of Hormuz. The U.S. has made clear that it will sail through the Strait at will and that such a closure would not be tolerated. The U.K. also said that

it would assist the U.S. in keeping traffic flowing through the Strait through the use of military force in the event of Iranian action. With the EU working toward an embargo on Iranian imports, China has cut its purchases of Iranian oil by half, as it seeks deeper discounts from the country, and Japan is consulting with U.S. officials on the sanctions. The sanctions appear to be having a negative affect already as inflation is rising in Iran, along with increases in food costs.

 

February natural gas settled up $.082 to $3.062 and recovering some of yesterday’s selloff, on forecasts for cooler weather ahead. Temps are expected to turn warmer into early next week, but then falling to below-normal levels during the next two weeks. Meanwhile, the gas-rig count increase by 2, to 811, according to Baker Hughes, but sill 11% below last year at this time.

Wednesday January 4

February crude settled up $.026 to $103.22 on continuing concerns about the tensions between Iran and the West. Prices spiked to $103.74 in six minutes this morning on a report that EU leaders agreed, in principle, to an embargo on Iranian imports – but prices came off due to the lack of clarity on a timeline or parameters of the ban. Iran has threatened to close the Strait of Hormuz if sanctions were approved, on which the U.S. has said that such an action would not be tolerated. Iranian exports to EU countries amount to about 600,000 bpd of the country’s total exports of 2.2 million bpd. The saber-rattling by Iran raises concerns about a supply disruption, although the Saudis have stated that they will use spare capacity to offset any such disruption by Iran. Meanwhile, the market closely watched the equities markets that moved from negative to positive today on worries about euro-zone solvency, after news that Spain is weighing an application for emergency loans and European central banks are parking record amounts of cash at the central bank rather than offering inter-bank loans – those fears were offset by more encouraging data on U.S. factory orders and auto sales.

 

February natural gas settled up $.102 to $3.096 on the cold-weather blast that has moved from the Midwest to New York, as well as a forecast that calls for colder weather in the 11-15 day outlook. The uptick was due to additional buying based on the cold weather, but traders remain cautious with inventories at record levels for this time of year. The Dow Jones Newswires Survey of analysts and traders show an expected storage draw for last week of 80 bcf. If correct, that will put storage at 3.468 tcf, 15% above the 5-y/a.

Tuesday January 3

February crude settled up $4.13 to $102.96 and ending at the highest price in eight months, on heightened tensions between Iran and the U.S. Iran’s army chief warned a U.S. aircraft carrier not to return to the Persian Gulf following a visit to Dubai, as ten days of Iranian war games came to a close.  Widespread belief is that the U.S. will bring the carrier back, putting Iran in a tenuous position, in that they cannot enforce their projected control over the Gulf without military action. Saturday, Obama signed sanctions against Iran’s central bank into law, which processes most of the country’s oil-export payments. Meanwhile, manufacturing reports showed positive signs in December for the U.S. and China, bullish news for oil demand.

 

February natural gas settled up $.004 to $2.993 still below the $3.00 mark despite the snowstorm blowing into the Northeast. Prices increased somewhat intraday, but faded later on forecasts calling for temps in the Northeast to return to unseasonably warm levels by the weekend. Prices could be headed to around $2.74 if mild weather persists.

NG Continuation

Notice the front price of $2.457.  Next few days, watch $2.405 as the next major technical support to the downside.  If we break that on storage, we will surely have a $1 handle by summer.

 

It’s beginning to look a lot like Christmas

Will be out until after the new year, I hope you have a very happy holiday season.