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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: robert b furman who wrote (22293)	8/25/2009 4:27:34 AM
From: axial	1 Recommendation Respond to of 71479

Hi Robert - Thanks for the observations; agreed that NG can make big inroads into the energy markets, especially in power generation. It will take time to penetrate other markets - not that it won't be done, but it takes time (and capital) to build out the infrastructure. You can live right beside a pipeline, and because of the cost/regulatory constraints, have no hope of getting NG in your house for years. But it will come; there are a lot of drivers for replacing other fuels with NG. --- On crude, I've found only one other poster's observations to confirm the game that's being played: "Could even have oil storage in tankers ready to deliver after the report. I've seen them set off Louisianna by the 100's - doubt they count that volume until they unload." Message 25882932 He gets it. Last week's drawdown was just a little over 4 VLCCs, and no, inventory increases in tankers aren't reported by API or EIA. VLCC owners are hurting; rates are at their lowest for years (no demand, no transport) so they're desperate to lease them out for storage. VLCC rates to nosedive as oversupply kicks in Number of tankers available in Middle East to hit 92 in five weeks Thursday 20 August 2009 CHARTER rates for very large crude carriers are set to fall again next week amid forecasts that the market faces an oversupply of tankers in September. lloydslist.com It's an opportunity made in heaven for speculators. The game works by pumping crude, or refinery output as unfinished crude and distillate into tankers then holding supply offshore (out of inventory). Then when EIA reports inventory drawdowns futures rise, and the offshore crude gets a better price. The truth is that inventories are growing - but offshore storage isn't reported. So when 8 million barrels of crude get refined and pumped into tankers, the futures go bananas, because everyone thinks it's a sign that demand is increasing. Nope! There's crude, unfinished crude and distillates floating in tankers off Malta, the Gulf, Iran, Scotland - almost anywhere safe moorage can be found. This is a variation on the techniques pioneered by Enron, which revolve around manipulating futures and spots. It's like squeezing a water hose, and letting it swell up - then charging customers extra for the water they get. As long as you can squeeze the hose, you're making money - you've distorted supply and demand. At the same time, arms-length players bid up the futures. So the players make money two ways. Access to capital is required to play the game; that's why it stopped for a while: capital markets froze. Crude went down to $35. When capital markets thawed, even banks joined non-commercial speculators: they love it - and the end-users are paying them billions in extra cost, just when the nation is trying to emerge from a recession. How long can it go on? There have been drawdowns of floating storage, but it's never completely stopped. The last drawdown left 29 VLCCs (equivalent to 58 million barrels) still full. And that's only what was reported. Jim

To: robert b furman who wrote (22293)	8/25/2009 4:59:35 AM
From: Real Man	Respond to of 71479

Ng is just a domestic market, as opposed to crude. It is thus hurt by US economy, which is weaker than the globe, especially Asia. Asia is recovering and adding jobs already. There is demand destruction, but with prices dipping into 2-s, it's only a matter of time before major supply destruction kicks in. What seems to have hurt ng was major LNG shipments from Russia. Domestic supply is coming down.