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0 May 24 2012 @ 10:39am by Matt Smith in Capital Markets, Crude Oil, Economy, Global Energy, Natural Gas

Commodity Capers Through The Caped Crusader

General financial markets, and (from a burrito state of mind) specifically Commodityland™, have been looking rather dark and scary this week, leading me to think of Gotham City.

The gothic nature of markets has left me to consider, contrast, and compare the inhabitants of the home of the Caped Crusader with all things commodity-like.

Batman –  The obvious choice for WTI crude oil. Both are dark, volatile, mysterious, and difficult to predict. The maverick Batman also has an alter-ego through Bruce Wayne, who mirrors the attributes of Brent crude oil – an upstanding and well-respected member of the (global crude oil) community.

The Riddler – Of all the moves in Commodityland™ at the moment, the natural gas rally appears to be the biggest riddle. Yes, we were due a rally from the 10-yr lows of $1.90, but a 44% rally seems a little excessive in just over a month, given not much has changed, as domestic production has hardly budged lower while the storage surplus to last year remains at 40%+.

Alfred the Butler – Behind the scenes, trying to keep order in global oil markets is our commodity cartel, Opec. Which perhaps makes Saudi Oil Minister, Ali al-Naimi our reliable butler. At a time when the market is much perturbed, al-Naimi tries to be the voice of reason, trying to spread calm across the crude markets.

Catwoman – Or is US natural gas like Batman’s feline friend: skittish, leaping higher, but potentially heading for a dead cat bounce?

Robin– If headline crude oil is Batman, then Robin must be a wingman for the winged-man, his trusty sidekick….gasoline, diesel and other products. Despite occasional dissention, Robin ultimately follows Batman wherever he goes.

Poison Ivy – Representing European power markets is Poison Ivy, as markets are creeping, creeping lower as the price drivers of power – euro coal, carbon, euro natural gas, and crude – all totter lower as well.

Commissioner Gordon – The goal of the Commodity Futures Trading Commission (CFTC) is similar to that of Commissioner Gordon – to protect the public and to foster a safe, open, and sound (trading) environment. A tough act to live up to.

Mister Freeze – China’s oil demand growth is suddenly freezing up. While Platts data shows Chinese oil demand only showed slight growth with an increase of 0.3% in April (compared to the >5% we are used to), official data shows oil demand for April posted its first fall since February 2009.

The Penguin – Iran must be the Penguin. The Penguin is described as ‘driven by self-interest, often relying on cunning, wit, and intimidation to exploit his surroundings for profit and to advance his own schemes’. As talks continue regarding Iran’s apparent pursuit of nuclear weapons, its threats to close the Strait of Hormuz have added a risk premium to prices this year, meaning increased profits on their oil sales (making up some of the shortfall from lower sales of oil due to impending sanctions). Unrelenting, the country is immediately asking for concessions after finally agreeing to let nuclear inspectors enter certain compounds in its country. Cunning indeed.

The Joker – If Iran is the Penguin, then Venezuela has to be the Joker through its leader, Hugo Chavez. Given his seeming intense dislike for the US – exhibited through colorful quotations (such as these) – it is interesting to note that Venezuela is the third largest exporter of oil to the US.

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