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Posts Tagged ‘UK natural gas’

0 Oct 8 2010 @ 10:45am by Matt Smith in Capital Markets, Crude Oil, Global Energy, Natural Gas

Burrito Bites

Some weeks are slow for finding articles, yet other weeks there seems to be a whole bunch of funny and/or interesting stories from which to choose from (which is great). So I hope you enjoy these as much as I enjoyed picking ’em. Talking of picking things, whoa; you’ll be needing a bigger wheelbarrow:

This first full week of October has not disappointed by being full of twists, turns, and tumbles. Crude partied hard for the first part of the week to five-month highs, before running out of steam and slumping into the couch before – hang on – having a red bull and re-surging into this week’s curtain close. Natural gas on the other hand, attacked the prompt month low for the year with pinpoint accuracy  on Thursday (to the third decimal point), finally breaking lower to $3.58 early on Friday (the forward curve has diverged higher instead). As all good weeks should, we have finished on a high note as Nonfarm Friday has once again mixed up markets better than a blender. Hark, snack attacks:

–Natural gas price seen as too low to sustain production.

Exporting shale gas could keep shale producers in business.

–Weird air travel stories. (loved this).

head in the clouds

The Gas Cartel: on the road to another Opec?

–Can natural gas keep China from destroying the world?

–NFL income inequality.

–UK natural gas to fall from double US price on Qatar.

Lady Gaga is more powerful than Nancy Pelosi.

–A high-risk energy boom across the US.

–Strategy around hitting up a buffet at a function.

–Paris oil drillers target 100 billion barrels near brie, wine. (Careful!!!).

–Think you are having a bad day? Woman mistakenly uses glue for eye drops.

–US could save millions of barrels of oil by cutting food waste.

–UFO closes Chinese airport. (pesky aliens).

I’m really sorry, Natty, but your price action this week means there is no way you can avoid receiving The Burnt Burrito Award of the week. You have been burned, toasted and smoked to a new prompt month low for the year at $3.583. What a week.

The Burrito Deluxe Award of the week goes to crude, for hitting 5-month highs.  

The Burrito Headfake of the Week goes to the Nonfarm payroll data this morning, which showed the unemployment rate falling from 9.7% to 9.6%, despite the loss of 95,000 jobs (the labor force is not growing). The most worrying number is the underemployment rate, which is back up to 17.1%; a year ago I discussed this worrying rate here – and it still hasn’t made headway. Eek. 

Burrito Odd-turned-funny Story of the WeekCigar guy.

Have a restful and recharging weekend!

0 Sep 17 2010 @ 8:22am by Matt Smith in Capital Markets, Crude Oil, Economy, Global Energy, Natural Gas

Burrito Bites

yoga bear

Good morning and welcome to another burrito bites. This week has seen natural gas grapple over the $4 mark, as hurricane activity in the Atlantic is becoming more crowded than a kitchen at a party (last time that two category four hurricanes were in the Atlantic at the same time, Al Jolson was topping the music charts…). Crude has gravitated back lower to the comfort of $75 after a pipeline outage gave prices a temporary tweak higher, while general markets have shown some optimism. Next week brings a bunch of housing data, so for now let’s look on the bright side, and demolish these delights:

–Will hurricanes continue to miss the Gulf? (h/t LZ)

Thick layer of oil found on the Gulf of Mexico seafloor.

–Your pants are lying to you

–Who killed the climate and energy bill?

–Crude oil contango and the Cushing Syndrome.

–Does drinking in college affect your grades? (Next week: Was Humpty Dumpty fat?).

Natural gas erodes coal’s share of US power production.

Four factors for energy’s future.

–The top words used on TV in the last year.

37 states hit nighttime high temperature record this summer.

–Firm handshake = a long life (probably).

–The great ethanol boondgoggle.

–First US tar sands project approved in Utah.

–Wonderful article – journalist gives credit cards to panhandlers, tracks what they buy.

–Natural gas may have jump-started oil eating bugs.

Yoga Bear.

The Burrito Deluxe Award of the Week is split between weekly crude inventories, which came in absolutely plumb in line with consensus (that never happens), and gold, as it reaches a new record high. Bravo!

The Burnt Burrito Award of the Week goes to NBP UK natural gas for being so subdued. This usually volatile commodity has traded sideways (flatlining) all week as maintenance season continues, while adequate supplies ease concerns. C’mon, buddy, show some life! Boo!

Have an inspired weekend!

1 Jul 21 2010 @ 10:50am by Matt Smith in Crude Oil, Global Energy, Natural Gas, Random, UK natural gas

The Commodity Cast of Toy Story

Trust me on this one, it’s not as far fetched as it first seems. Commodityworld(tm) is a big place, and there have been a number of commodities in the news recently, some familiar to energy, and some not. So let’s take a closer look at some of these headline grabbers, through their natural comparisons to our pixelated friends from Toy Story.    

A Crude Tail

What first sent me on the Toy Story tangent is the way that crude oil has been following equities recently. I know the relationship has been somewhat apparent over the last eighteen months or so, but this relationship has tightened even more in recent weeks. For July, the correlation between the S&P500 and the first-month WTI price has been a remarkably strong +0.93 (correlations can run from + 1.0 to -1.0), which makes me draw the analogy with Slinky the dog. Equities represent the head, and crude is , erm, the rear. Corporate earnings surprises are causing the excitable head of the dog (equities) to lead the charge for risky assets. This leaves crude at the other end of the slinky, being whipsawed around, yet following nonetheless. No tail wagging the dog here, crude is ignoring its own fundamentals for the most part, and being easily led.    

Cocoa and Lumber

Next up is a not an energy commodity, but is one of our favorite commodities….chocolate. Or in trader-talk, cocoa. Cocoa is currently making headlines, due to some blatant market manipulation by a British hedge fund led by Anthony Ward. Last week he bought 241,000 tons of cocoa beans, which is enough to manufacture 5.3 billion quarter-pound chocolate bars. The transaction was the single largest cocoa trade in 14 years, and unsurprisingly caused prices to rise. Prices have since fallen in the last day, but with the power to potentially force manufacturers to raise the price of chocolate bars, cocoa is like Buzz Lightyear, as we could see prices head to infinity…and beyond.       

UK Nat Gas

There’s not much to say about first-month NBP UK natural gas, except that it continues to make other-worldly moves, rising a stellar 48% on the prompt month for Q2 this year, only to rip 21% lower since early July. Referred to as avant garde jazz on the burrito previously, we update this analogy as UK nat gas gives us as much cohesion sometimes as a three-eyed alien. So while we come in peace, let’s move on swiftly.      

From limber lumber to lumber the tumbler

The next non-energy commodity to be sliced and diced is lumber, hence its blunt analogy to…Woody. Lumber is making headlines for very different reasons to enemy-then-buddy Buzz Lightyear (i.e., cocoa). Lumber steadily increased in value throughout 2009 and into 2010,  as the economic downturn forced the closure of lumber mills and increased lumbers scarcity. Now, just as mills start to come back online, cracks are re-appearing in the economic foundation. This has been highlighted most recently by remarkably poor housing data. Hence, as the chart glaringly illustrates, lumber prices are getting the whoop-bang-wallop treatment.      

Darth Tater

 Last, but by no means least, we come to my favorite character in Toy Story; the one, the only, Mr Potatohead. In Commodityworld(tm), Mr Potatohead represents our dearly beloved US natural gas, as unconventional plays such as shale and LNG are changing the face of the natural gas complex. As technology develops, we will see these changes continue over the next decade or three, to where the market will look unrecognizable to what it once was.      

So, on that note, I bid you farewell, and leave you to dwell on the analogies laid out before you. And as Darth Tater would say, may the force be with you.

0 Jul 1 2010 @ 10:23pm by Matt Smith in Capital Markets, Crude Oil, Economy, Global Energy, Natural Gas

The Burrito Review of Q2

The end of the Q2 leaves us somewhat this way.

Ironically, the end of the show ‘Lost’ this quarter has left financial markets to take up this mantle instead. Let’s rise above the confusion this week (= diplomatic way of saying ‘the worryingly bad market action’) to put on the wide-angle lens and take a broader look at the bigger picture: the key moments in the second quarter of 2010:  

Round the energycommodityworld(tm) in sixty seconds:  

US natural gas first up; natty started Q2 a nickel higher than the prompt month low of the year at $3.81, and gradually rallied through the quarter on a mild end to spring, a hot start to summer, and an expectedly busy hurricane season. That was, however until last week, when it ran full steam into a key technical resistance level around $5.23 and got knocked onto the canvas, waking up around the $4.62 mark where it finished the quarter. UK natural gas has been one-way traffic, starting the quarter sub-30p, but closing out here nearly 50% higher in the mid-40 pennies, as outage after outage at Norwegian and North Sea facilities have caused gas flows to be volatile, and traders to be skittish. European power markets prompt and calendar strips have taken a nod from natural gas,  while also tracking recovering coal and carbon prices. Finally, black gold, Texas tea started Q2 in the lofty position of the mid-$80s, before having a rollercoaster ride as low as $64.24 on a fourteen-day trouncing which saw it lose over 26% from the high of the year made at $87.15. This fall was due to a tumultuously tumbling euro / strong dollar relationship, as sovereign debt worries across the Eurozone sprung up like sprinklers on a golf course. Prices have recovered somewhat to finish the quarter at $75. Stop the clock. 

Scores on the doors for Q2, 2010:  

US natural gas prompt month: +19.3%
US natural gas Calendar 2011 strip: +0.01%
NBP UK natural gas prompt month: +48.1%
NBP UK natural gas Calendar 2011 strip: +40.9%
German power prompt month: +34.2%
German power Calendar 2011 strip: +16.7%
WTI crude oil prompt month: -11.9%
WTI crude oil Calendar 2011 strip: -13.3%
S&P500: -11.9%  

Biggest energy-related event of the quarter: The BP oil spill in the Gulf of Mexico. You probably heard about it.   

Macro-economic event of the quarter: It’s difficult to pick one from many good ‘uns, but the jobless recovery in Q2 has been as good as anything to provide smoke and mirrors for clarity on an economic recovery in the US. The smoke has mostly been blown and the mirrors held by census workers, who have temporarily boosted / distorted unemployment data, although like all good discolorations, this will all come out in the wash.   

Biggest financial non-event of the quarter: The revaluation of the Chinese Yuan. Just like getting excited about Christmas or a vacation, the arrival of this event didn’t quite live up to the hype. Despite the initial excitement it caused, the revaluation was a political manouver by the Chinese to avoid it being a key discussion point at the G20 meeting in Toronto last week. In that respect, mission accomplished. In terms of having maximum impact, minimal movement, mission accomplished too. All in all, a bold hand, cheekily played by the Chinese.  

Chart of the Quarter: The below chart tells a number of stories; that crude and equities continue to be best friends; that their fortunes have continued to improve over the past eighteen months, and that if you are culpable for the biggest oil spill in US history, your stock price will get absolutely spanked:  

  

 Largest loss of the quarter: Apart from BP’s stock price, one of the obvious candidates is eighties pint-sized icon, Gary Coleman…RIP  

Stealth datapoint move of the quarter: I have been a bond bull and wrong for a very long time (note: Pinky and the Brain post), so am not surprised to see Treasuries quietly rally throughout Q2 to pierce the 3% level. The downside to this move is what it indicates: that investors are worried about either deflation or a double dip recession. Unfortunately, the financial crisis and subsequent bailouts come with a steep price to pay; as we say in England, you pays your money and you takes your choices.  

Q3….bring it on.

0 Jun 25 2010 @ 10:58am by Matt Smith in Capital Markets, Crude Oil, Economy, Global Energy, Natural Gas, UK natural gas

Burrito bites

Ninja turtle!

Welcome to another Friday, where we have seen crude involved in a battle all week with a key technical level (like a ninja hero in a half-shell…crude power!), while natural gas has mostly pootled sideways as the threat of a storm disrupting production in the Gulf is unlikely. Elsewhere, Greek worries rise up once more and global bond markets rally, while equities continue on a bumpy road which they hope leads to recovery. Next week sees the end of the second quarter, but for now, let’s ease ourselves into the weekend by getting our munch on:

Let’s go fly a kite (…in the Gulf to see what’s going on).

A Colossal Fracking Mess – a rather one-sided Vanity Fair article on unconventional gas.

–Mystery surrounding ‘horse boy’ on google street view.

–In retrospect, not the best strategy ever….exporting US LNG.

–Man run over by his truck-driving dog.

Pig in Boots

–The most excellent Dian Chu paints a biflationary picture (= simultaneous inflation and deflation), and further expands on investing ideas based on this scenario here.

Kids prefer food products with cartoon characters on them (duh! don’t we all?!).

–The science of oil and peak oil revisited.

Email error ends up on road sign. (other confusing signs at the end of the article).

–Britain is the pivot point for global LNG.

–On the trail of the soda tax – higher prices = less soda drinking.

–Fast-reading computers are about to drink your trading milkshake. (ok, weird title, but the post is excellent). 

–Turning body heat into electricity.

Guardian angel slows traffic.

The Burrito Deluxe Award of the week goes (just a teeny weeny bit begrudgingly) to the US soccer team, for qualifying top of their group in the World Cup. Bravo, boys.

The Burnt Burrito Award of the week goes to US housing, and their post-rebate blues. Despite 30-yr mortgage rates hitting all time lows, housing looks set to to head lower once more, with new home sales looking horrid.

Rock on.