The Old Days.
Do you remember the old days in the oil market! You know, like a year ago. Like thedayswhenthe energy complex would rise for the slightest reason.For example, a storm cloud in the Gulf of Mexico or a refinery outage in the Virgin Islands and we'd get a pop higher.Remember when supplies and spare production was so tight that even the slightest hint ofeven a tinydisruption would send energy prices through the roof. Almost like if you spilled some gas at a gas station it would make oil run up a buck. Or how about thereliable storiesabout good oldglobal warming and how the weather patterns with the warmer than normal winters meant that the planet was doomed. And that if we didn't stop burning fossil fuels this very minute we would become as extinct as the dinosaurs.Oh sure, we have oil making another bull run, yet the stories surrounding the rally just seem to lack the excitement and drama that kept oil traders glued to their screens. And we know that it was not climate change that made the dinosaurs extinct but the fact that the dinosaurs were heavy smokers. Some of them maybe three pack a day! Of course now in spite of the fact that oil prices have gone up, the type of stories that used to send us into a tizzy barely get a mention. All this talk of the intricacies of macro economics like exchange rates and the impact of quantitative easing and running record budget deficits just doesn't seem to have the same allure and reliability of those more exciting stories.
Ok,ok,maybe the pirate stuff that has been going on has been a little compelling yet it does not seem to have the same type of market impact and explosive exciting and romantic moves that we had in the past. Darn that spare capacity. I mean this isn't like Pirates on the Caribbean these are pirates off the coast of Somalia. And let's face it Somalia isn't exactly an oil producing powerhouse and where is Johnny Depp when you need him. Sure they hijacked or sea jacked a huge oil tanker a few months ago and they have got on a few oil tankers over the years but you cannot count on them to hijack only oil tankers. But, what if you had a band of pirates from a country that was a major oil producer? Now surely that would make oil rise.
Well guess what. It is happening and it is happening in Nigeria. It appears that Nigerian militants are learning to become pirates and taking a page out of the Somalia pirate's playbook. Take the Bloomberg story about the Nigerian militants in Nigeria's oil-rich Niger River delta region that hijacked two vessels and attacked military positions in two days of fighting. Now if that had happened a year ago oil prices would have screamed. Bloomberg reports that a tanker, MV Spirit, charted by the Nigerian National Petroleum Corp. to deliver condensate and an unnamed cargo ship were seized along with their crew citing claims from Colonel Rabe Abu-Bakr. Bloomberg says that the Movement for the Emancipation of the Niger Delta or MEND, the main rebel group in the region, attacked two marine bases at 2:00 a.m. local time and destroyed five military gunboats and various support vessels.MEND has extended an initial 24-hour deadline for oil companies to evacuate the region within 48 hours and declared a no-fly zone for helicopters and sea planes operating on their behalf with effect from midnight on May 16.
Of course oil still seemed more focused on the stock market and where the options might settle as opposed to any fear of loss of production, not even that high yielding high quality sweet crude out of Nigeria.
And what about building that summertime hurricane premium into the oil and gas market? You know that as Al Gore warned us about those darn inconvenient truths that because of global warming we are going to always see those massive hurricanes. In fact Al has proven to himself that the two main causes of hurricane Katrina were global warming and the Bush administration.So surely again this year with another year of greenhouse gases we should be getting ready for the mother of all hurricane seasons! Well not so fast. In a first time interview with Reuter's news Colorado State University hurricane forecaster Bill Gray said he may reduce his next Atlantic season forecast because sea temperatures are cooling and a weak El Nino may appear by late summer.Things are looking better and better for fewer storms, Gray told Reuters in an interview at the Florida Governor's Hurricane Conference in Fort Lauderdale.Off the west African coast there's colder water. There's increasing high pressure in the Azores Islands that typically makes the trade winds stronger. How could there be colder water in this era of global warming?! Why are global temperatures falling instead of rising this decade? Does this mean that hot head Al Gore should chill out? Maybe he will have to give his Oscar back!
Reuters' says that in April, Gray's team predicted the six-month Atlantic hurricane season, which starts on June 1, would see 12 tropical storms, of which six would become hurricanes and two would reach major status of Category 3 or higher on the five-step Saffir-Simpson scale of hurricane intensity.The pioneering forecaster said if his research team lowers the forecast, it would likely drop to 11 storms. The new forecast is scheduled for release on June 2. The April forecast was already reduced from one issued in December, when the CSU team called for 14 tropical storms, including seven hurricanes and three major hurricanes.
So does that mean the market needs to reduce its hurricane premium again? And reduce the global warming premium? Well we always have those gassy cows.The UPI is reporting that m ethane from cattle can be reduced by as much as 25 percent by balancing the cows diet. By trying to create the right mix of starch, cellulose, fat and other elements of feed, scientists in Canada say that they can change the way a cow does the type of things cows do every day. The UPI says that cattle account for 72 percent of Canada's methane, a powerful greenhouse gas that threatens the environment. The University of Alberta says they have developed a formula to cut methane from cattle by balancing elements found in their feed, including ash, fat and sugar. And no baked beans!
We're longJune heating oil fromapprx 14700 -stop 13900.
Buy June RBOBat15000 -stop 14200.
Buy June natural gas at 390 -stop 330.
The Dan Flynn Corn & Ethanol Report
Rains across the Mid-West. Again !
This will only prolong delays in planting !
The July Corn settled at 428 3/4 which was up a 1/2 of a cent in last nightssession.
The range was 431 to 426 1/4. I'm forecasting a run to teat resistance at 450.
Energies are trading mostly lower which is creating a good buy opportunity !
Have a Great Trading Day !