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Posts Tagged ‘demand’

0 Oct 28 2010 @ 10:45am by Matt Smith in Crude Oil, Global Energy, Natural Gas

Ten Halloween Facts That Lead Back To Energy

With Halloween coming up, let’s take a look at ten scary Halloween facts, and how their numbers leave a trail of blood back to our dearly beloved energy complex: » read more

0 Aug 13 2010 @ 10:58am by Matt Smith in Capital Markets, Crude Oil, Economy, Global Energy, Random

Burrito Bites

Arabian Sea, Aug 9

Happy Southpaw Day!

Stormy seas across the financial world have caused the good ship crude to roll over. Prices have charged lower through $80 as the Federal Reserve confirmed fears of a slowing US economy, while data from China has pointed to economic headwinds (…although self-inflicted, to quell inflationary squalls). US natural gas was buffeted lower at the beginning of the week, but has steadied the ship and has drifted sideways ever since. Equities have been looking like they want to visit Davy Jones’ locker, while bond prices are…King of the world! Ahoy, me hearties, grub’s up: 

–Ten stops on the road to carbon management – article by Summit’s John Hoekstra in GreenBiz this week.

–America’s energy future may lie in Canada’s oil sands.

–Fantastic infographic on the timeline for Back To The Future (h/t MK).

–China’s oil imports fall in July on curbed demand.

–Peak Oil proponent and energy legend / conspiracy theorist Matt Simmons died this week.

A reverse auction for energy efficiency grants.

That's your lotto.

–A hummer built with lottery tickets.

–IEA raises the global forecast for oil demand.

–What’s the carbon footprint of the internet?

Human domino world record.

–Sales of electric cars in Spain increase 16-fold from last year….to 16.

–Balloons glow to show air quality.

–Huge ice island could pose threat to oil, shipping. (h/t LB/NG)  

–A salute to Southpaws everywhere.

–Is Snooki our new investment guru?

The Burrito Deluxe Award of the Week goes to the bond market, for being the voice of reason and quietly pointing out for the past few months that all is not well in the US economy. 

The Burnt Burrito Award of the Week goes to black gold, Texas tea. Last week it boomed into the $80 realm in an over-excited reaction to manufacturing data, only to be brought back down to earth this week with all the gloomy talk and doomy data. 

Burrito Headline of the Week: Goat Rentals for Weed Control.

Burrito Word of the Week: Shaleapalooza.

Have a rip-roaring weekend!

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 Oct 13 2009 @ 1:00pm by Matt Smith in Capital Markets, Economy, Global Energy, Random

Things that make me go hmm

This one really gets my goat, does my noodle in, and twists my melons. And it goes by the name of  ‘the underemployment rate’. So, the story begins….the underemployment rate includes those people who are unemployed, those who are working in a part-time job (but wish they had a full-time job), and those who are so discouraged that they have (temporarily, hopefully) stopped looking. So it is basically the unemployment rate (a portly 9.8%) plus a few people here or there working part-time in a coffee shop and sort-of-looking for a proper job, plus those who just can’t be bothered at all. Right? Wrong.  underemployment

While the current unemployment rate is 9.8%, the underemployment rate is nearly double at 17%. This is reaching pandemic proportions, as baby boomers are forced to retire later as their pensions have just been halved, 18% of  18-24 year olds are unemployed, and 7,000 people a day are facing the expiration of their unemployment insurance. 

And that isn’t even the biggest doozie on deck: since the start of the recession in December 2007 we have seen 6.8 million people lose their jobs in the US – just shy of the population of Hong Kong.

The crux of the problem arises when we build our energy burrito; the ingredients just don’t add up. Energy demand is driven by consumption. Consumption is driven by spending.  And spending is driven by income – income earned in a job.  And consumer spending makes up approximately 70% of GDP in the US. With such a drag on GDP, how can we expect energy demand to not only recover (without such espresso shots as cash for clunkers and $8k first-time homebuyer rebates), but also spur itself on to significant growth?

Put simply, we can’t. And the punchline? Sorry, there isn’t one. 

0 Sep 16 2009 @ 10:45am by Matt Smith in Capital Markets, Global Energy, Natural Gas, Random

Supply, demand & market equilibrium = rock-paper-scissors

This cheap jerseys is not a profound assertion, but merely an observation: commodity markets are always in a state wholesale MLB jerseys of flux, because, just as rock-paper-scissors doesn’t have a single dominating force, commodity prices constantly face a myriad of moving forces. There may be a millisecond or two at a moment in time where a market is balanced, but in reality, the most efficient market will always have some sort of imbalance. This supply and demand volatility at: is further escalated by factors ranging from investor sentiment to technical analysis. 

rock

Rock-paper-scissors is not a game of chance, and neither are commodity markets. You have to place some faith in a rational approach by studying the fundamentals of a Treatments market to forecast future trends, because it is overwhelmingly likely that supply and demand “MAKS?PAK are the key price drivers (barring technical analysis). But while in rock-paper-scissors you can always ask With for wholesale MLB jerseys the ‘best of’ 3, Dead 5, 7, Collections ad infinitum (depending how badly you are getting beat), adverse price movements from an ill-timed trade means you can be punished for a single weak decision; hence the need for extreme care.