Natural Gas

With all the action in Syria, the Ukraine is no longer a subject for discussion in the West. In Russia, where the Ukraine is still a major problem looming on the horizon, and where some 1.5 million Ukrainian refugees are settling in, with no intentions of going back to what's left of the Ukraine, it is still actively discussed. But for the US, and for the EU, it is now yet another major foreign policy embarrassment, and the less said about it the better. In the meantime, the Ukraine is in full-blown collapse - all five glorious stages of it - setting the stage for a Ukrainian Nightmare Before Christmas, or shortly after.

The news out of Canada - and especially out of Alberta, the heart of the country's oil patch - has just gone from disturbing to downright terrifying. 

When the word 'bloodbath' just doesn't quite sum it up, distressed debt investors's bonuses have been obliterated in 2015. Despite seeking safety away from oil and coal companies, one trader exclaimed, the pain is "like cancer, it's spreading throughout the body," as every industry from materials to retail and industrials has collapsed... though, as Bloomberg reports, some investments stood out in their awfulness.

"I hope I'm wrong but I fear Washington is trying to provoke a war in the Middle East to cover the coming collapse of the Petrodollar system and the American economy when the dollar is no longer the world reserve currency. The war is necessary to blame the coming dollar and debt collapse on Russia and China rather where it belongs on Wall Street, the central banking cartel and Washington political establishment. Remember while a Washington provoked war or conflict is likely to start in the Shia Crescent; it could spread across the Middle East and into Europe."

At least 91 people were missing after a giant mound of mud and construction waste spewed out of an overfull dump site in a southern China boomtown and buried 33 buildings in the country's latest industrial disaster.

• Splintered Spanish vote points to fraught coalition talks (Reuters)
• Brent Oil Falls to 11-Year Low in London as Global Glut Persists (BBG)
• Oil prices hit lowest since 2004 as supply balloons (Reuters)
• U.S. Probes Theranos Complaints (WSJ)
• Driver plows onto Las Vegas Strip sidewalk 'like bowling ball', one dead (Reuters)
• Yellen, Bull Markets and Extinction in a Seven-Year Stock Rally (BBG)

While world leaders signed the 'historic' agreement signed in Paris to fix the world's "greatest threat," a natural gas storage site in southern California is belching 145,000 pounds per hour of Methane - a greenhouse gas 70 times more potent than carbon dioxide. What is worse, while official proclaim this a "top priority" a fix won't arrive until spring as emergency crews recognize "the leak was far from routine, and the problem was deeper underground."

“To the intelligent man or woman, life appears infinitely mysterious, but the stupid have an answer for everything.” ~Edward Abbey

The Senate and House passed the spending bill this week, which the President signed into law on the same day. Embedded in the law is a provision to lift the 40-year old crude export ban. The lifting of the crude export ban is a historic milestone, but seemingly less relevant for US E&Ps, Midstream and Oilfield Services as compared to a year and a half ago when WTI-Brent spreads were close to $9.00/bbl vs. the current spread of $0.80/bbl. Nevertheless, there is still a negative long-term impact on refiners should spreads re-widen.

 I am sure corporations, wildcatters and trading firms are all making business decisions based upon these low natural gas prices, and they are not from the bullish side of the equation.

The announcement of the restoration of Israel-Turkish relations should be seen in the context of Turkey having nowhere else to go.

WTI crude has collapsed to cycle lows after the US oil rig count surged by 17, the largest jump in 5 months.

Following the latest BOJ statement, the market found itself wrongfooted assuming the BOJ was actually launching another episode of easing, sending the USDJPY soaring, until suddenly the realization swept the market that not only was the incremental action not really material, but even Kuroda spoke shortly after the announcement, confirming that "today's decision wasn't additional easing." The result was one of the biggest FX headfakes in recent days, perhaps on par with that from December 4 when EUR shorts were crushed, as the biggest carry pair first soared then tumbled and since the Yen correlation drives so many risk assets, also pulled down not only Japanese stocks but US equity futures.

Natural-gas fell to the lowest ever inflation-adjusted price in its history of NYMEX trading on Wednesday as extremely warm weather continues to limit demand. As we recently explained, the glut in nattie is worse than that facing the crude complex, and while the glut in oil is expected to continue for the next year or so before balancing in late 2016, the pain for liquefied natural gas (LNG) could be just beginning. As one trader warned "this market is in real trouble...just wait for the bankruptcies."

“Strengthening Frontex, creating a kind of border guard would by all means be needed, beneficial,” he said on his way into a meeting of EU foreign ministers in Brussels. “But the way the commission proposed it—for it to be a structure independent from nation states—is astounding.” He added: “There’d be an undemocratic structure reporting to no one knows who.”