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1 Jul 30 2010 @ 7:56am by Matt Smith in Crude Oil, Economy, Natural Gas, risk management, Risk Strategy

Keep Calm and Carry On

The phrase ‘Keep Calm and Carry On’ originated from a planned  poster campaign by the UK Government to drive on the ‘stiff upper lip’ mentality of the British public as they faced the onset of World War II.  Although this poster was never officially released, it became popular after copies were discovered in a shop in the north of England about ten years ago.

This phrase has resonated with me recently, as financial markets continue to tread water and trade sideways, as the outlook for the global economy remains somewhat mottled. We have had our recession, and we have experienced some semblance of a recovery. But now we are at a fork in the road; from hereon out we may experience a double-dip in the global economy (top of the pops on google search), we may see economic growth gather pace, or we may see the global economy stall and stumble along a path inbetwixt a recovery and a recession.

So it is no surprise given this backdrop that we see sideways action in our dearly beloved commodities. After crude pre-empted a global recovery last year by more than doubling between January and June, prices have traded within a broad range ever since, as prices await the next signal that global oil demand will continue to increase by virtue of a clearly strengthening global economy – both in developing and developed countries:

US natural gas prompt prices have followed a similar sideways pattern, despite having a different set of influences at work. Being both a domestic market, and a radically-changing one at that, prices have remained subdued yet supported as market participants await further clarity on future supply from game-changing sources (i.e., unconventional supplies) and technology. All the while, prices look for further improvement in future demand by virtue of improving economic growth: 

 So, in this current state of flux, the best thing we can do (as well as being in constant dialogue with an energy consultant, of course) is to keep our heads, and wait for the dust to settle, realizing that commodity prices can turn on their heads at any time. Yet all the while, remembering the mantra…to keep calm and carry on.

1 Comment on this post:

  1. […] the year, I wrote a post about the sideways movement in US natural gas and crude oil prices, called ‘Keep Calm And Carry On’. Well, now seems an opportune time to flip the coin, as we are seeing UK natural gas prices panic […]

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