Oil got run over by Mario Draghi when he said bond buying talk was naïve! You make think the European Union is over, but somehow today the market still believes. They were meeting in Brussels and came up with a new pact. But Britain didn't back it as they said it was just too way abstract. They had tried to change the treaty but that was not a go, so they will enforce stricter budget rules and promise to keep all the countries spending now in tow. Now will the countries heed the warning; can they get their economies in the black or are some counties just too lazy, hoping that the Germans will pick up all the slack. Oil got run over by Mario Draghi right before it was time for him to leave, for that meeting down in Brussels, where the saving of the Euro is yet to be achieved.
Commodity bulls got a slap in the face after it was clear from the comments made by EU central bank Chief Mario Draghi that instead of a bazooka, expect more of a Saturday night special. Oil prices got hit hard as the hope for a massive stimulus shot went out the window after it got a boost on the EU rate cut. Mario Draghi said the ECB's bond-purchase program was neither eternal nor infinite. So I guess that means they actually may not print money forever after all.
Natural gas saw a larger drop than expected yet the rally was still muted because of historically high supply. The Energy Information Agency reasons that, Early winter production freeze-offs (natural gas flow blockages resulting from water vapor freezing in the natural gas stream) this week have led producers in some western areas of the country to shut in natural gas wells, according to recent news reports and analysis from BENTEK Energy, LLC (Benter). This early incident represented the first wide-spread test of freeze protection systems for this year's heating season. Total U.S. gross production was down 1.4 percent from the previous week. This week's freeze-offs mainly occurred in the West, with San Juan basin production falling 400 million cubic feet (MMcf) on Monday before mostly recovering by yesterday. Stranded natural gas at a compressor station in the Rockies also contributed to production declines later in the week. These supply declines have occurred concurrently with increased demand for natural gas for both space heating in the residential and commercial sector, and demand for natural gas for electric power generation. However, the production shortfalls this week were relatively minor compared to other major freeze-offs that have occurred in the past. Freeze-offs in February 2011, for example, created the biggest supply disruption since Hurricanes Gustav and Ike in 2008.
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