Oil traders need to get visited by the ghosts of Christmas oil trading past, present and future to get that holiday risk taking sprit. Remember those famous Christmas spikes on Iran rumors or when Russia cut off gas supplies to Europe? Yesterday oil traders acted like someone told them there was no Santa Claus the way they pulled in their bull horns and hid from risk. This is despite the fact that all of the economic data that was released such as weekly jobless claims, the Empire State and Philly Fed Manufacturing numbers and good numbers from FED-EX, should have got the bullish juices flowing, yet after the blood bath the day before, kept traders cautious and fearful. Oh, some Scrooge may point out that the Industrial Production number had a lot to be desired but the preponderance of the evidence suggests that the US economy is indeed improving.
Of course we know what the problem is. The problem is Europe. Europe continues to miss opportunities to try to set the market straight as their aversion to stimulus and euro bonds is holding us back. You can be pro quantitative easing or anti quantitative easing but based on the US data, compare the US debt with record low yields against Europe with record high yields, at least for now quantitative easing seems to be working better than the European inflation aversion. Ben Bernanke may be smiling.
So despite all of the hope-ium that permeated the markets, the truth is the markets still fear a euro collapse and besides why try to get to risky with Christmas right around the corner. God bless us all everyone.
Natural gas got its first triple digit withdrawal yesterday when the Energy Information Agency reported that supply fell by 102 billion cubic feet. It seems production cut backs are taking its toll. Still no one really believes that with the winter being mild that supply will tighten enough to give natural gas a significant rally. Natural gas supply is 154 bcf, above year ago level and about 10% above the five year average. Even with the cut backs in production the shale gas revolution will keep this market well supplied. In fact the EIA reported that that the Marcellus-area spot natural gas trading has more than doubled from under 1 billion cubic feet per day (Bcfd) to almost 2 Bcfd on average since 2005. This is helping to change the way the world is thinking about natural gas!
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