Mark of London

Will Your Home Heating Bill Be Higher or Lower This Winter?

Why show natural gas instead of HO? Possibly because this more volatile (and cheaper) fuel has a larger downward move. What about a year over year comparison? Cooler summer, new natural gas plays, record drilling rigs, and it still takes a front month price this high to put gas away into storage. Roughly a 30% higher price than last year on the same date. Of course at the rate it has fallen, natural gas will be free in about two months time- right?

Nasdaq vs. Homebuilders vs. Oil

The main driver for the oil price is no longer demand, but supply. Even the IEA has finally recognized the foolishness of making forecasts based on demand. The IEA is about to post their July Medium Term Oil Market Report which may offer a preview of the bad supply news coming when they release WEO2008 in November. Anyone in the business hates to say it is different this time, but where is the supply response? IT IS DIFFERENT THIS TIME because for a variety of reasons- above ground and below ground- the supply response is extremely muted despite a clear price signal. People are going to agonize over falling demand but this falling (OECD) demand is forced first by sharing limited production growth with new consumers and next by falling oil production. Actually the demand is there if we could bring on more supply at $75/bbl...what we have is a constraint on consumption because we can't burn what we don't have. Get used to the idea of falling consumption, falling production AND higher prices.