Showing posts with label natural gas. Show all posts
Showing posts with label natural gas. Show all posts

2022-09-20

Frozen Baizuo 2023 Edition

ZH: New England's Power Crisis Set To Return, Regulator Warns

New England's power grid could be several cold snaps away from the start of an energy crisis that reappears whenever temperatures dip because of the state's heavy reliance on natural gas generation, delayed/blocked expansion/upgrades to energy infrastructure, and lack of grid diversification.

Average temperatures across Massachusetts started to slope down in mid-August. Temperatures are between 55-60 degrees Freigheight, indicating the heating season could be just weeks away.

Another serious issue is the controversial US law, the Merchant Marine Act of 1920, more commonly known as the Jones Act. This law helps ensure the US merchant marine fleet remains busy by only allowing US vessels to transport goods from one domestic port to another, barring foreign vessels.

This means New England can't receive LNG shipments from the US Gulf because the US shipbuilders don't build LNG carriers. So LNG facilities in New England have to rely on foreign shipments -- adding to the complexity of the region's issues.

2022-08-16

How High Will Natural Gas Go?

A push towards $20 per mmBTU isn't a crazy target. Unless Europe turns the Russian gas back on, it will take incredible deflation and economic decline to keep the price from heading there since Europe is soaking up whatever supply flows through LNG terminals.

2022-07-26

T-L-T, It's Dynomite

ZB and TLT look ready to pop.
Recent high for ZB is 143, for TLT it is $119.27. Neither has exceeded their Friday high yet. TLT has gapped up, down and back up if the morning gain holds for 40 more minutes into the open.
WTI crude oil returned to $99 per barrel overnight. This has been a resistance area before. It's lights out for the global economy if crude oil rises as the economy sinks into recession.
Natural gas and the euro have been moving in lockstep, inversely correlated. U.S. natural gas hit a new 52-week high this morning following Gazprom cutting flows to Germany by 50 percent.
Equity indexes all look toppy.

2022-07-10

Depression or a Rally?

ZH: French, German Leaders Warn Populations "Prepare For Total Cut-Off Of Russian Gas" As Social Unrest Looms
Germany too is fearing the worst, as its main conduit for Russian natural gas, Nord Stream 1, has long been scheduled to go down for 10-day maintenance starting Monday. But the persisting fear is that Moscow won't bring it back online, for the purpose of squeezing the German economy further as punishment for its Ukraine stance, forcing Berlin into emergency rationing.

Germany's population of some 80-million is reliant on Russia for over one-third of total gas supplies, and there's no immediate alternative. Should Moscow use "routine" maintenance as an excuse to keep supplies halted, some German publications are even predicting social unrest as the squeeze gets put on the working class population in particular.

Vertical moves up and down in energy prices occurs because of marginal changes in supply and demand. Oil has traded above $130 per barrel twice in the past 25 years and also below $10 twice. That was in the context of a functioning global markets.

VD: A Dire Situation

Three years ago, a megawatt hour of gas cost EUR 7. The price is now EUR 175, and is expected to rise to at least 250.
I'm at a loss for words. The Baizuo of Western Europe, at the behest of Baizuo in Washington, DC, are taking steps that could result in significant deaths of their own people, for no clear gain. There is not a kinetic, existential war between the West and Russia at the moment. Energy and materials aren't being funneled into armament factories for the war, fuel for jets, tanks and missiles. They're destroying their ability to resist Russia with these shutdowns. It looks like they're surrendering rather than fighting.

It makes sense if they are Greens though. The destruction of the West, industry and capitalism was always an aim of the radical elements. It makes sense if the governments are at war with their own people. It makes sense if depression and borderline starvation is a preferred solution to what otherwise might be a fierce domestic resistance to the "Great Reset." It makes sense that truckers and farmers, who could form the core infrastructure of serious domestic resistance movements, would be targeted first. It makes sense that Russia would "cooperate" in destroying the West and sinking into a century or more of oblivion.

At any other time I'd say, "this won't happen." They'll come to their senses, this is more rhetoric than policy. Yet at every step this year, that was the wrong interpretation. They've taken that step and then proposed an even more destructive step that was also followed through with. 

The decision tree from here is as bifurcated as can be. On one path, Europe takes a step that creates irreversible damage. It could be deaths in winter, a depression unlike anything since the 1930s or Weimar Germany, and/or a revolt that becomes violent against the political/media class. A revolt like what was seen in Sri Lanka. On the other path, Europe blinks and decides against collapsing itself on purpose, for no good purpose. Markets and economies that are braced for hell breathe a sign of relief.

One possible sign of relief: Canada to return repaired Russian pipeline part to Germany

Canada has announced it will return to Germany a repaired turbine of the Russian Nord Stream 1 pipeline, which is a core source of the gas supply to Germany.

...Ukraine had urged Canada not to return the repaired part, saying it would undermine sanctions against Russia.

...But when announcing its decision on Saturday, Canada's Natural Resources Minister Jonathan Wilkinson said it was taken to "support Europe's ability to access reliable and affordable energy as they continue to transition away from Russian oil and gas."

...The minister particularly cited concern for the German economy as well as German citizens, saying they could be left unable to heat their homes during winter.

2022-06-23

Adios Inflation

Here a quick and oversimplified primer on inflation and financial markets, with notes on this cycle.

1. Inflation is a rise in money and credit. The biggest force for inflation this cycle was...federal deficit spending and stimulus. Mostly over. "Real" money supply is falling. "True" money supply is falling.

2. Rising commodity prices are not inflation. They can be inflation, and they can help create inflation if the central bank or government "finance" the increase instead of accepting slower growth. That was the Fed in the 1970s. That was the Fed until May 2022.

3. Markets don't care about the CPI, they care about first and second derivatives. When the inflation starts starts turning, markets reprice. Understand that gasoline quickly dropping to $3.50 per gallon is still relatively high for U.S. consumers, but that it represents a deflationary bomb in the financial markets.

4. Consumer prices can keep rising. When I say disinflation/deflation is starting, I always get pushback of "have you been to the supermarket lately?" Don't trade on this information. Consumer prices probably won't drop much. If they drop, it could take months. Gasoline is a prominent exception.

5. The yield curve is inverting. The market is starting to price in rate cuts.

On to the charts...

Wheat

Copper
Oil
Natural gas

Corn
Soybeans

2022-06-14

First Bullish Headline: Natgas Plunges 16pc

Energy has to fall for a market rally. Natural gas leads the way:
Looking at the fibonnaccis, a move similar to 2008 would take natural gas to around $5.50 in July.

2022-05-24

We Didn't Think...

Western institutions have grown soft because they haven't faced hard choices in decades. Need more money for wars, welfare or tax cuts? Print up more treasury bonds! Financial markets in trouble? Engage in central bank intervention. Economy weakening a bit? Bailouts! "We didn't think supply chains would be damaged for going on two years...," "We didn't think Russia would invade Ukraine...," "We didn't think....We didn't think....We didn't think...."

2022-05-17

Greens BTFOd Again: Solar Increases Emissions, Toxic Air Pollution

The West has tapped a vast well of stupidity.

North State Journal: Duke Energy application points finger at solar for increased pollution

Duke spokeswoman Kim Crawford confirmed that increased solar power on the state’s electric grid is increasing emissions of nitrogen oxide (NOx), a dangerous air pollutant. She said that reductions in carbon dioxide (CO2) emissions could also reverse if current solar growth continues without policy changes.

Climate advocates blame increases in manmade gases like CO2 for global warming and have promoted solar power as environmentally clean.

An increase in emissions triggers the need to rethink national energy policy, experts say.

Crawford provided measurements showing that even on sunny days — when solar power is at its maximum output — more NOx pollution is released into the air than would occur if no solar electricity were used and natural gas were used instead.

People working on real, tangible, specific problems are doing good work. Ocean acidification, micro plastics and so on, conservationists saving natural habitats. The focus on climate change and alternative energy has sucked up money and attention though, and here is yet another piece of evidence that they are giant scams.

If solar is indeed increasing emissions, then my confidence in "madmade climate change" being a 100-percent false rises above 90-percent confidence. This would be the killshot for me because my chief complaint about solar was that it doesn't create enough energy, and not enough reliable energy. The switch to solar didn't make sense because it was going to increase energy costs and harm the economy, when nuclear would lower energy costs, help the economy and also eliminates emissions:

That’s because traditional power plants — including cleaner burning natural gas plants — must scale back electric generation to accommodate solar energy surging onto the system when the sun rises, and power back up when the sun sets and solar energy dissipates. That starting and stopping reduces efficiency and incapacitates emission control devices, increasing pollutant levels.
If alterative energy increases emissions, which it obviously does with Germany talking about how a return to coal may be necessary, how come the people making computer models didn't know that? If you have climate models predicting emissions and you think Man is making the emissions, then you need to model human behavior in response to various policies. They don't do that accurately though, in fact it looks like they have the sign wrong. The next question is, what other variables are they screwing up, weighting wrong, assuming is geometric or arithmetic when it is vice versa, or ignoring entirely?

Man does clearly impact the environment. Concrete-coated cities have their own microclimates. Dams and manmade lakes, ocean pollution, air pollutions and so on exist. But when an entire movement and industries are built on computer models selling the climate change narrative and those very same people push a solution that makes things worse, not better, then one must call the entire effort into question.

It was a joke in the 1990s that greens were watermelons because international socialists who lost their sinecures and/or credibility when the Soviet Union collapsed moved into environmentalism. Soviet central planning and Green economics with solutions like wind and solar grew from the same intellectual branch. Many people were surprised by the Soviet collapse, so they are again as Western economies are being seriously hobbled by the same line of thinking. 

The goal has always been rip roaring inflation that destroys developed economies. Nations and peoples can only be made equal in misery. 

2022-04-18

Natural Advantage: Lost

Zh: US NatGas Spikes Above $8 For First Time Since 2008 As LNG Exports 'Save Europe'

The U.S. can export cheap natural gas or it can export cheap chemicals made from natural gas. Or it could export cheap food made from fertilizer made from cheap natural gas.

A cheap energy advantage is an absolute advantage. America's ruling class frittered it away in under 2 years.

As for the chart, prior spikes like the current one ended in the double digits. I make no prediction about this current run, but do expect that double digits are coming during this cycle, along with a new all-time high.

2022-04-06

$10 Natural Gas

Breaking out of this zone doesn't guarantee a trip to double-digits, but that is a very possible destination. Natural gas will probably go to a new all-time high.

2022-04-03

Energy Week

Crude oil appears to have topped. Natural gas looks stronger with Europe bidding up U.S. supplies. An explosion to $10 may still be in the cards. Energy service stocks look strong. That all said, I was expecting crude would act as a giant millstone around the sector going forward. Instead, Russia has interrupted markets again with a gas cutoff: Gazprom Halts Gas Shipments To Europe Via Critical Pipeline
I have had puts on USO for a little over a week. They expire in May. I still plan on holding them here on Sunday, but will have to see how this week develops.

2022-02-27

Killing Ukraine: It's a Gas

Who wins? American LNG exporters. Who loses? American consumers and American workers. They will pay more for natural gas as it is bid away by Europe at higher prices. Also, American valued-added industries such as fertilizer and chemicals will also suffer as prices rises. Low natural gas prices had shfited production and investment in new plant & equipment into the U.S. The U.S. still has an advantage, but it will shrink as gas prices converge with world markets.

2022-02-02

It's a Gas

Taco isn't jumping yet, but Antero is close to a breakout. Although I worry that the actual taper (if it ever begins) could sink oil prices, natural gas has a history of going its own way. If I'm wrong and oil takes off, natural gas stocks (along with oil services) are still dirt cheap. They haven't priced in the gains to this point,

Rollover Beethoven

The indexes have further to go if they want. The main thing I'm looking at right now, with respect to the major indexes, is how much more concentrated these indexes are becoming. BigTech has become much bigger. The correction defused the situation, but the rally has created an even bigger bomb. The charts aren't as great of a setup as before, but the market is more reliant on stocks like Apple and Google than it was when the sell-off started. The bull case is everything else catches up and these stocks lag. The bear case has two possibilities. The immediate bear is an immediate rollover, perhaps if Amazon misses its earnings. The delayed bear is Amazon beats and fuels another leg up in BigTech, setting up a bigger decline.
Google going to break out or die at its all-time high?