WTI solidly above $95 before economic data released later this morning. Canadian sands oil still sells at hefty discount. No word from the administration on how review of the Keystone XL permit is going. Cue up Connie Francis.
RBN Energy: a look at the recent run-up in the price of natural gas (NYMEX).
It is not immediately apparent why open interest should be hitting record numbers just now on the NYMEX. During 2012 natural gas prices hit a 10 year low in April (under $2/MMBtu). Physical gas volumes have fallen off because the price spreads between trading hubs in the US have narrowed - making it harder to profit from the arbitrage between geographic locations. Rampant new US gas production is also changing traditional basis relationships and making storage requirements harder to forecast.
A number of trading firms have cut back their operations as a result. Last week (March 15, 2013) the Russian trading company Gazprom closed its Houston gas trading operation. In November 2012 Freepoint Commodities laid off gas traders and in May 2012 the Centaurus Hedge Fund that traded natural gas closed down.
The dreary outlook for physical gas trading is reflected in data from the Intercontinental Exchange (ICE) electronic exchange. The chart below shows monthly average natural gas day ahead trading volumes on ICE at US trading hubs. The data shows that trading volumes in 2013 are down about 10 percent since 2012 and that December 2012 volumes were down 20 percent versus the prior year.From a reader: a nice human interest story on a Vietnam vet; the Walking Man of Murphys. At the LA Times.
WSJ Links
Section R (Environment):
- Green investing: so much promise, so little return -- "At the Wall Street Journal's ECO:nomics conference, the talk was about all the innovations taking place in renewable energy -- and about al the investors who are losing interest." The worse thing one can do in business and investing is over-promise and under-deliver. And that's exactly what Algore, Barryobama, and environmental activists have done, probably setting their movement back two or three decades. Promoting natural gas the bridge to the future, the movement could have made incredible strides.
- A most enduring miracle, a conversation with Smokey Robinson. Yes, "that" Smokey Robinson.
- Prehistoric but far from primitive: scenes from the stone age: the cave paintings of Lascaux, The Field Museu, through September 8. Talk about coincidence. Just last week I bought a new book, The 100 Diagrams That Changed the World, by Scott Christianson. I don't have it in front of me but I believe the Lascaux cave drawings were the first i the book. It's an incredible book; I talked about it earlier. It's a great book to Socratically share with middle school granddaughters.
Heard on the street: Cyprus may need more doses of medicine:
The terms of the deal are certainly very tough, tougher even than the original deal that the Cypriot Parliament had rejected a week earlier, which would have seen the government impose a tax on all depositors, both insured and uninsured. That deal was a serious misjudgment by the euro zone and Nicosia since it clearly breached the spirit of the European Union-mandated deposit guarantee.
The effective collapse of the two major banks will have inflicted grave damage on Cyprus's credibility as an offshore financial center. The drastic shrinking of the financial services sector, currently 18% of gross domestic product, will have profound consequences for the rest of the domestic economy. That in turn could lead to much greater losses for the banking sector than originally envisaged under a review of banking-system assets by investment manager PIMCO.The risk is that the loss of confidence is so severe that, as in the case of Greece, further bailouts are needed.
At the very least, Cyprus will now need sustained support from the euro zone, over and above its bailout loan, to rebuild its shattered economy.Section B (Marketplace):
- Worries hit RIM after US launch
- 17-y/o sells app for $30 million; no link; easily found by googling
- T-Mobile, first major wireless carrier to drop subsidies for smartphones
- Board pay fuels Hess battle; huge article; almost entire half page of last page this section
- WSJ has an article on UK's Centrica importing natural gas from the US; MDW posted that story yesterday
- Liberals face spending dilemma; liberals find themselves in a spending trap;
- Wow, I've been saying this for two years, maybe longer: the great recession has been followed by the grand illusion; don't be fooled by the latest jobs numbers. The unemployment situation in the US is still dire.