1. Oil and the Global Economy
Oil prices remained flat last week as news supporting higher prices balanced off news that would tend to push prices lower: large US crude stocks; improved US employment numbers which including the fourth straight month of job gains above 200,000; Libya falling apart; equity markets doing well; optimism about Ukraine; and the approach of the summer driving season all factored into the balance. At the end New York futures closed at $102.22 a barrel and London at $108.61.
In contrast to the oil complex, natural gas futures continued to rise last week on concerns that warmer weather will prevent adequate injections into US stockpiles this summer to avoid shortages next winter or in the years ahead. During the week natural gas futures rose 3.7 percent to close at $4.71 per million BTUs. Despite higher injections the week before last, US inventories of natural gas are still 37 percent below the five-year average for the week. The consulting firm Wood Mackenzie said last week that natural gas production from the Marcellus shale is now above 12 billion cubic feet per day and Ohio’s Utica shale gas production is now above 1 billion. Wood Mackenzie expects that these numbers will increase to 20 billion for the Marcellus and 5 billion the Utica by 2018. No mention of what is going to happen to the rest of US natural gas production, which has been falling in recent years.
resilience
