Commentary by Eric Wilder – Natural gas prices on the New York Mercantile Exchange reached a record of $15.10 per MCFG today before settling at $14.994.  Prices should have fallen after the EIA released figures indicating we either consumed less gas or put more into storage this year than we did for the same time period last year.  Savvy traders weren’t buying it.

A major winter storm is threatening the northeast and setting record low temperatures in other parts of the country.  Traders also know that fully one third of the natural gas production in the Gulf of Mexico is still shut-in because of Hurricanes Rita and Katrina.  They also know their have been no new monster domestic gas discoveries reported recently.

Despite optimistic storage figures that seem to belie our own eyes, smart marketers are keeping their own counsel.  As long as they do and the weather stays cold, natural gas prices will continue to soar.

http://www.ericwilder.com   http://justeastofeden.blogharbor.com

Commentary by Eric Wilder – China appeared on the energy radar screen earlier this year when it made a bid to buy the American oil company UNOCAL.  Though unsuccessful, the bid highlighted several facts:  1) China is second only to the U.S. in consumption of fossil fuels, 2) China has the fastest growing major economy in the world and, 3) China is rapidly becoming a major competitor to the U.S. in the exploration for fossil fuels.

CNOOC Ltd. announced Tuesday that its parent company, China National Offshore Oil Corp., has signed a partnership with Canadian company Husky Energy Inc. to drill a deep exploratory well in the South China Sea about 185 miles south of Hong Kong.  If successful, it would become China’s first deep-water offshore oil field.  CNOOC Ltd. also has similar agreements with Oklahoma-based oil companies Kerr-McGee and Devon Energy.

CNOOC’s announcement exemplifies the world’s energy conundrum – there is a finite amount of crude oil available for consumption while the demand for the product is suddenly soaring.  The price of crude oil is up today on the news of continued cold weather in the U.S.  Marketers should take heed that there is yet another factor controlling the upward price of crude – an Asian giant thirsty for oil.

http://www.ericwilder.com   http://justeastofeden.blogharbor.com