Natural Gas

• Detroit ‘Gut Kick’ Poses New Test for Long Suffering City (BBG)
• Florida lawmakers urge overhaul of 'Stand Your Ground' law (Reuters)
• Investors pour huge sums into US equity funds (FT)
• Snowden Standoff Threatens Obama-Putin Moscow Summit (BBG)
• China, U.S. companies' great hope, now a drag (Reuters)
• Morgan Stanley stock traders rebuild burned bridges (Reuters)
• Huawei spied for China, claims ex-CIA head Michael Hayden (FT)
• Gorilla Flipping Homes as Rebound Revives Rapid Trades (BBG)
• BRICS joint action at G20 summit may be wishful thinking (Reuters)

One of the prime reasons why the Middle East holds such importance to the West is partiality because it is the main supplier of oil and natural gas to countries in the West. Over the past several decades Western countries had few, if any, options other than to purchase its oil and gas from Middle Eastern oil producing nations despite the headaches that came with it. Headaches, for example, that’s included political unrest, turmoil and strife. But now with the newly found fields of oil and gas in Central Asian countries that are only the beginning of what may lie in these vast oil fields of the steppes and the Caucuses, there may be options.

Those hoping that the Stalingrad & Propaganda 471 would soar above 1700 today on some abysmal Industrial Production will have to taper their hopes, as the number printed right on top of expectations, or at 0.3%, up from last month's 0.0%. This was driven by a better blend of Manufacturing (+0.3%), Mining (+0.8%), both the highest since February, and Utilities which dipped -0.1%, but far better than the prior two months' -1.6% and -2.8% declines on "cooler|warmer" weather. Parallel to the IP data the Capacity Utilization printed at 77.8, up from an upward revised 77.7 last month, and a fraction above expectations, leading to the first "beat" in the series since 2010 even though the headline number was 0.1 above the lowest print of 2013 to date. Alas, with the Old Normal average in the 80+ range, there is much room to go before the legacy manufacturing slack is absorbed. One thing is certain: QE is not helping.

For those who don't eat or use energy: feel free to stop reading now - your inflation came in just as expected, at 0.2% up from May, and 1.6% higher compared to a year ago. However, those unlucky few who are forced to eat, use and A/C and/or commute, your inflation just saw its biggest monthly hedonically-adjusted jump (don't forget the deflationary impact of that 80 inch LCD TV you have zero intention of buying), or 0.5%, since February's 0.7% and well above the 0.3% expected. This was driven by a 6.3% surge in gasoline prices, and a nat gas price index soaring 11.7% leading to a 3.4% increase in Energy prices, even as the Food increase of 0.2%, tied for the highest since December 2012 was subdued. And while non-food and energy components did not see major spikes, June apparel prices jumped 0.9%, the highest since 2012, as did Medical Care Commodities and Services, rising 0.5% and 0.4% respectively, both posting the highest M/M jump since well into 2012.

It is obvious that the oil market is out of touch with the fundamentals.  But this is just my analysis, let`s hear what Oil industry executives believe.

The perception of natural gas as a mainstream fuel for vehicles runs the gamut, dependent upon where you live: from the improbable... to the viable... to the everyday reality. So here are ten points to stir up the melding pot of the great natural gas vehicle debate.

So much for the lessons of Fukushima. Never mind oil spills, the Russian Federation is preparing an energy initiative that, if it has problems, will inject nuclear material into the maritime environment.

Revenues are declining. Hence the need to cut costs. Solution: offshoring to a cheap country! And it's not the only one.

• MSM discovers that soaring dollar hurts corporate profits: P&G to Apple Hurt by Strong Dollar Keep S&P 500 Profits in Check (BBG)
• China Posts Surprise Drop in Exports (WSJ) - lol: "surprise"
• Plan Reins In Biggest Banks (WSJ)
• European Commission Seeks Authority to Wind Down Banks (WSJ) - and Germany just says 9
• U.S. Banks Seen Freezing Payouts as Harsher Leverage Rules Loom (BBG)
• Brussels sets up clash with Berlin over banks (FT)
• EU to Toughen Creditor-Loss Rules at Failing Banks From August (BBG) - or September, or October, but definitely November... 2023
• China's crude, iron ore imports falter as demand cools (Reuters)
• Obama pushes economic case for immigration as House eyes next steps (Reuters)

Big Banks Move Into Uranium Mining, Petroleum Products, Aluminum, Ownership and Operation Of Airports, Toll Roads, and Ports, and Electricity

Even if the last thing the tapering US "recovery" needed is a surge in energy costs, it may soon be getting them following yet another news flashback, this time to the 2010 GOM disaster. Just headlines for now from Bloomberg:

• U.S. IS RESPONDING TO A LOSS OF WELL CONTROL IN GULF OF MEXICO
• GULF OF MEXICO EVENT OCCURRED AT SHIP SHOAL BLACK 225 PLATFORM
• GULF SITE POSSIBLE SHEEN IS OVER 4 MILES WIDE BY 3/4 MILE LONG
• ENERGY RESOURCES TECHNOLOGY GULF OF MEXICO OWNS PLATFORM: U.S.
• U.S.: COMPANY ASSESSMENT SAYS GAS FLOWING FROM GULF WELL

WTI meanwhile up another $0.70 just shy of $105. Time to rid the world of evil speculators once and for all.

When it comes to changing the "measurement" rules in the middle of the game, nobody does it quite like Japan: in the aftermath of the Fukushima nuclear explosion, when radiation was soaring (and still is with Tritium levels just hitting a record high but who cares - Goldman partners have to earn record bonuses on the back of the irradiated island) Japan's solution was simple: double the maximum safe irradiation dosage. Done and done. Now, it is time to do the same to that other just as pesky, if somewhat less lethal indicator: inflation. Reuters reports that the Japanese government plans to adopt a different measure of inflation to the central bank's.

The U.S. natural gas market may be on the verge of a big swing. And it’s not about the talk of the town, Liquid Natural Gas (LNG). It's about an unexpected source of natural gas demand...

The chairman of the Suez Canal Authority is coordinating a "high alert" military response as protests escalate against President Morsi. The army and navy stepped up patrols of the 190-kilometer (118-mile) canal linking the Red and Mediterranean seas about a week ago, he said. "Closing the canal outright would be very difficult without the support of the military," Barclays notes as the army and navy steps up patrols of the 190km canal. While unrest that toppled Hosni Mubarak, Mursi’s predecessor, failed to halt traffic last year, fewer vessels passed along the canal. An average of 1,435 ships a month used the link, the lowest figure since 2005. So far, traffic is "normal and has not faced any disruptions."

The volatility of recent weeks is but a mere small taste of the volatility in store for all markets in the coming months and years. The global debt crisis is likely to continue for the rest of the decade as politicians and central bankers have merely delayed the day of reckoning. They have ensured that when the day of reckoning comes it will be even more painful and costly then it would have been previously.