Category:

Hedge Funds’ Natural Gas Bets Jump as Thermometer Drops: Energy

Hedge funds got more bullish on natural gas, betting the most on rising prices in 11 weeks as cold weather in the U.S. diminished fuel inventories. Money managers boosted net-long positions by 44 percent in the seven days ended Dec. 10, U.S. Commodity Futures Trading Commission data show. The total was the most since Sept. 24. Bullish wagers increased for a third week. Gas surged 6.6 percent during the report week as forecasts showed widespread below-normal temperatures. MDA Weather Services in Gaithersburg, Maryland , predicted it would be colder than average in most of the contiguous U.S. from Dec. 23 through Dec. 27. A government report on Dec. 5 showed a weekly drop in gas supply that surpassed analysts’ estimates. “The weather has been incredibly cold,” said Teri Viswanath, director of commodities strategy at BNP Paribas SA in New York. “The expectation is that we’re going […]

Posted On : Published By : Tom Whipple
Category:

Insight: Wall Street's energy rivals – Big Oil, a French utility, the Koch brothers

As a historic oil and gas boom transforms the U.S. energy sector, Wall Street is losing the battle to remain the partner of choice for energy producers and major consumers seeking to protect themselves against volatile prices. In the thriving Texas Permian oil patch and beyond, banks are being edged out by a handful of the world’s biggest corporations including BP Plc, Cargill and Koch Industries. With Wall Street hamstrung by growing regulatory restrictions, a recently finalized ban on proprietary trading and increased capital requirements, these corporate behemoths are leveraging their robust balance sheets and savvy global trading desks to capture as much as a quarter of the global multibillion-dollar market for hedging commodity prices. New risks have arisen this year that could tilt the scales further, as the Federal Reserve considers limiting banks’ ability to trade in real physical markets, the kind of deals […]

Posted On : Published By : Tom Whipple
Category:

Insight: Wall Street’s energy rivals – Big Oil, a French utility, the Koch brothers

As a historic oil and gas boom transforms the U.S. energy sector, Wall Street is losing the battle to remain the partner of choice for energy producers and major consumers seeking to protect themselves against volatile prices. In the thriving Texas Permian oil patch and beyond, banks are being edged out by a handful of the world’s biggest corporations including BP Plc, Cargill and Koch Industries. With Wall Street hamstrung by growing regulatory restrictions, a recently finalized ban on proprietary trading and increased capital requirements, these corporate behemoths are leveraging their robust balance sheets and savvy global trading desks to capture as much as a quarter of the global multibillion-dollar market for hedging commodity prices. New risks have arisen this year that could tilt the scales further, as the Federal Reserve considers limiting banks’ ability to trade in real physical markets, the kind of deals […]

Posted On : Published By : Tom Whipple
Category:

Drills spin to keep up with shale well depletion

By Collin Eaton December 15, 2013 The stubborn rock that the energy industry breached to unleash a nationwide oil and gas rush remains a worthy foe, as producers must turn their drills ever faster to keep the boom’s lifeblood flowing. Engineers have long known that shale, the source rock that fed North American sandstone reservoirs for millennia, could never muster the natural pressure producers need to extract oil and gas. Its molecules are too tightly packed: Shale is about 1,000 times denser than brick, and so far, only hydraulic fracturing can induce enough artificial permeability to clear a path for the fossil treasure. But that technique also creates an initial production spike that soon turns south: Behind the headlines boasting of a U.S. oil boom, producers have been grappling with rapid production declines at aging shale-play wells. The only answer: drill more and more wells. In recent months, falling […]

Posted On : Published By : Tom Whipple
Category:

WTI Crude Falls to 10-Day Low on Fuel Storage

West Texas Intermediate crude dropped to the lowest level in 10 days as falling demand boosted fuel inventories and on concern that the Federal Reserve will curb stimulus. Futures fell 1.1 percent this week. Prices slid 0.9 percent. Stockpiles of gasoline and distillate fuels jumped the most in 11 months in the seven days ended Dec. 6, the Energy Information Administration reported Dec. 11. More economists than a month before forecast that the Fed will start slowing its bond purchases at a meeting next week, according to a December Bloomberg survey. “Demand is weak and if we don’t see it become stronger, the market will come under pressure,” said Gene McGillian , an analyst and broker at Tradition Energy in Stamford , Connecticut . “Products are being put into storage, basically driving the market lower. The market is concerned about Fed tapering.” WTI for January delivery declined 90 cents, […]

Posted On : Published By : Tom Whipple
Category:

Natural Gas Posts First Loss After Four-Day Rise to 2-1/2 Year High

Traders cashed in on natural-gas futures’ climb to a 2-1/2-year high, sending prices down 1.3% Friday in the first decline five sessions. Analysts said the market was due for a correction after a steady climb over much of the past four weeks. Forecasts that the southern and eastern U.S. will get a break from lingering below-normal temperatures in the next six to 10 days provided an impetus for sellers. "We’re just taking a breath and a step lower," said Kyle Cooper, director of research at IAF Advisors, a Houston energy consultancy. "But it’s still going to be cold and we’ll probably work higher." Natural gas for January delivery on the New […]

Posted On : Published By : Tom Whipple
Category:

Ethanol Extends Weekly Decline to 11% on Senate Bill

Ethanol futures fell in Chicago, capping a second straight weekly drop, on concern a requirement to blend corn-based ethanol with gasoline will be eliminated, while U.S. production climbed to a 23-month high. The biofuel slipped 11 percent this week. U.S. Senators Dianne Feinstein from California and Tom Coburn from Oklahoma introduced a bill yesterday to remove the requirement from the federal Renewable Fuel Standard, Bloomberg BNA reported. Ethanol output in the U.S. rose to 944,000 barrels a day in the week ended Dec. 6, according to a Dec. 11 Energy Information Administration report. “You have a bipartisan legislation introduced to the Senate which would eliminate corn ethanol from the RFS mandate completely, and carryover from the bearish EIA report,” said Sean Wever, a biofuels broker at Green Key Markets LLC. “The bear has a lot of talking points right now.” Denatured ethanol for January delivery dropped 6.5 cents, or […]

Posted On : Published By : Tom Whipple
Category:

Iran halts technical-level nuclear talks over US sanctions move

Iran pulled out of technical-level denuclearization talks with six world powers Friday to protest the expansion of a U.S. blacklist of companies and individuals allegedly supporting Iran’s atomic program. Tehran said the U.S. move violates the spirit of last month’s groundbreaking agreement on Iran’s nuclear development. But the White House said the action taken Thursday to freeze the U.S. assets of firms and people in several other countries did not violate the agreement, and was based on existing sanctions. In the first major hurdle to the interim deal reached last month in Geneva, the United States targeted more than a dozen companies and individuals in Panama, Singapore, Ukraine and elsewhere for allegedly evading sanctions against Iran and maintaining covert business with Iran’s national tanker company.  Other companies the U.S. accused of being involved directly in the proliferation of material useful for weapons of mass destruction were also blacklisted from […]

Posted On : Published By : Tom Whipple
Category:

Iran Says U.S. Move Puts Nuclear Deal in Jeopardy

Iran abruptly cut off nuclear talks with world powers and said their interim deal was in jeopardy after the U.S. extended its blacklist of those accused of helping Tehran skirt sanctions. The U.S. said it was confident the talks would soon resume, signaling that the tensions are likely to blow over. U.S. and European officials acknowledged the negotiations had been suspended but played down the seriousness of Iran’s threats. "We’re making progress, but I think we’re at a point in those talks where folks feel a need to consult, take a moment," Secretary of State John Kerry told reporters in Tel Aviv on Friday. He said he expected them back "in the next few days." Iranian negotiators ended talks in Vienna with the five permanent members of the United Nations Security Council plus Germany and said they needed to go back to Tehran to consult. The Obama administration, facing […]

Posted On : Published By : Tom Whipple
Category:

U.S. sanctions move angers Iran, Russia sees threat to nuclear deal

A breakthrough agreement to end the standoff over Iran’s nuclear program appeared to face its first major difficulty on Friday with Russia warning that expanding a U.S. sanctions blacklist could seriously complicate the deal’s implementation. Russia, which, along with the United States, is among the six world powers that negotiated the November 24 interim accord with Tehran, echoed Iranian criticism that it violated the spirit of the deal and could "block things". The United States on Thursday blacklisted additional companies and people under existing sanctions intended to prevent Iran from obtaining the capability to make nuclear weapons. Iran denies any such aims. Diplomats said Iran, in what appeared to be a response, interrupted technical talks in Vienna with the six nations over how to implement the agreement, under which Tehran is to curb its atomic activities in return for limited sanctions easing. The developments highlighted potential […]

Posted On : Published By : Tom Whipple