This could be one explanation. Is it possible that since oil is traded in US dollars this is traders hoarding supply in anticipation of the dollar's collapse? I'm not an economist but any Freeper with a knowledge of commodity trading please weigh in.
“I’m not an economist but any Freeper with a knowledge of commodity trading please weigh in.”
As I sit here making as ISDA trade, I say all the talking heads are full of shit.
It’s basic stuff.
1. As natural gas was very high, they drilled a bunch of wells. One a natural gas well is sunk, to preserve your investment, you have to produce, pretty much at a fixed rate (you can choke if off, but there are various mechanical issues here).
Big pipelines, fixed infrastructure.
Well, supply is too big. So natural gas price is low, and will be for some time. No new wells will be drilled (because banks won’t lend on NG), so there WILL BE A SHOCK COMING in about 3-4 years.
2. Oil. Oil was overproduced and over-bought when it was $140/bbl. There are projects in the “pipeline” that started when oil was $140 that are winding down.
Refiners have too much oil. They borrowed money to by it. So they are in a hurry to sell it (and aren’t buying much, except to “balance” their blends — technical thing here).
Oil producers are selling inventories, but not producing all that much (except where they have to for lease protection), because it’s not profitable at $50/bbl. To make money, it needs to be around $70.
So supply here is dwindling.
EXECUTIVE SUMMARY:
NG is going to be low for several years. Expect a big spike after that.
Oil is on a gradual glide slope up to $75 (see previous post why $75), and will overshoot, then undershoot, then come back to $75.
I would expect some slight increase in retail gasoline, but there will be regional decreases, too.