Crude Consolidates Just Below our Previous 3rd Tier Downtrend Line

Crude futures are hanging just below our previous 3rd tier downtrend line after posting a solid recovery from our 1st tier uptrend line. Crude futures picked themselves up after Friday's sell off on large volume following broad based depreciation of the Dollar coupled with the S&P breaking through 1050. Investors returned to risk in the aftermath of better than expected global economic data. The most positive catalyst for crude futures was the impressive showing in Core Retail Sales on Tuesday. Improvement in consumption helps raise the outlook for present and future demand for commodities such as crude. As for the supply side, the U.S. reported another large inventory shortage for the third time in the past four weeks. The dramatic drop in supply combined.....Read the entire article

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Is Resolution of Natural Gas Conundrum About to Emerge?

For most of this year, natural gas prices have moved counter to almost everyone's expectations falling while crude oil prices have risen dramatically. The conventional explanation has been that natural gas production coming from the newly completed wells in the prolific gas shale formations around the country is much greater than from traditionally located and drilled wells. The unanswered questions are when will this phenomenon of more productive wells coming on stream end and why are producers continuing to drill ANY gas wells in a sub $3 per thousand cubic feet (Mcf) world?

Why are producers continuing to drill ANY gas wells in a sub-$3 per thousand cubic feet (Mcf) world?

Some producers have claimed that they have been scaling back their gas drilling activity lately, despite the recent uptick in gas drilling rigs, but the backlog of drilled but yet to be completed wells is being worked down and that accounts for many of the prolific new wells coming on stream. The answer to why producers are willing to drill and complete wells in today's low gas price world is answered by the strong contango that has prices for natural gas one year into the future selling at nearly $2 per Mcf higher than current fiscal spot prices. The two charts below.....Read the entire article with charts!

More Regulation for Energy Futures?

Bank of America-Merrill Lynch Vice Chair Tom Petrie on U.S. and U.K. regulator's plans for regulation of energy futures markets.