Natural gas: prices may finally be nearing a bottom

For those who follow the natural-gas markets, it was no shock to see the commodity fall to its lowest level in a decade, but prices may finally be nearing a bottom as production levels continue to slow.

“Gas is more than a bargain. It is not sustainable at this price,” said James Williams, an energy economist at WTRG Economics. “The question isn’t whether prices will rise, but when.”

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No Relief in Sight at Gas Pump

U.S. gasoline prices jumped 6% in February, and market experts predict they will climb higher because critical refining operations in the Northeast are shutting down.
From New York to Philadelphia, refineries that turn oil into gasoline have been idled or shut permanently because their owners are losing money on them.

Sunoco Inc. is expected to close the region’s largest refinery in July, taking another 335,000 barrels per day in production capacity off the market.

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Warmth Expected Across U.S. for Next Three Months

Temperatures around the U.S. have been as high as 65 degrees Fahrenheit (19.4 Celsius) above normal in the past week, with 400 record highs set yesterday, said Laura Furgione, deputy director of the National Weather Service.

Warmer temperatures across the U.S. in the last three months has “decimated the market” for natural gas, said Stephen Schork, president of Schork Group in Villanova, Pennsylvania, and reduced the need for all types of energy for heating. The trend is expected to continue through May in the eastern U.S. as well as the Southwest.

via Warmth Expected Across U.S. for Next Three Months, U.S. Says – Bloomberg.

Brazilian Iron Ore and the Environment

Three U.S. companies that are leaders in their fields–Nucor in steel, Cargill in agriculture, and ThyssenKrupp Waupaca in iron castings–are three of the leading U.S. purchasers of Brazilian pig iron. What are these American leaders doing to ensure that the supply chains of their Brazilian pig suppliers–particularly the camps of men who chop or chain-saw down eucalyptus trees and smolder them for eight days to make the charcoal feedstock for pig–are upholding Brazil’s environmental and labor laws?

As one surveys the Brazilian scene for companies that are recalcitrant in meeting their responsibilities to uphold environmental and labor laws in the supply chain, Brazilian pig producer Cosipar sticks out like a sore thumb. Cosipar has been expelled from Brazil’s National Pact for the Eradication of Slave Labor; it is not a member of the Instituto Carvão Cidadão (Citizens Charcoal Institute), the other Brazilian organization that ensures that its members are observing labor laws throughout their entire supply chain.

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Natural Gas Prices Drop Sharply On Bulging Supply

Natural gas fell 3 cents to finish at $2.27 per 1,000 cubic feet in New York. The price has fallen about 27 percent this year and is at the lowest level in a decade.
Some analysts speculate that the price could fall to $2 per 1,000 cubic feet or even lower if demand doesn’t pick up significantly when air conditioners are turned on for the summer.

The amount of natural gas in storage in the U.S. fell 80 billion cubic feet to 2.433 trillion cubic feet last week. That figure is 48.3 percent more than the five-year average, the Energy Department said. Analysts had expected a decline between 82 billion cubic feet and 86 billion cubic feet, according to a survey by Platts, the energy information arm of McGraw-Hill.

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Worker productivity slows as labor costs rise in the final months of 2011

Labor costs increased at a 2.8 percent rate in the fourth quarter. That’s lower than the 3.9 percent rise in the third quarter, but much higher than the initial fourth-quarter estimate of 1.2%.

Growth in U.S. worker productivity slowed at the end of last year, while labor costs rose. Fewer gains in worker output suggests employers must add workers if they want to meet higher demand.

The Labor Department said Wednesday that productivity rose at an annual rate of 0.9 percent in the October-December quarter. While that’s a slight upward revision from last month’s preliminary estimate, it’s half the pace from the July-September quarter.

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India Bans Cotton Exports

Front-month prices on ICE Futures U.S. rose 6%, or 5.25 cents, to settle at 92.71 cents a pound, while the more actively traded May-delivery contract surged by the exchange-permitted daily limit of four cents to settle at 92.23 cents a pound. The front-month contract, for March delivery, was exempt from the limit because it is in the period in which traders state whether they will deliver or accept physical cotton against the contract.

India is once again pulling the strings in the cotton market.

The world’s second-largest producer of the fiber after China unexpectedly announced an immediate ban on cotton exports, sending benchmark futures prices soaring.

via India Bans Cotton Exports – WSJ.com.

How Natural Gas Is Changing the Global Energy Market

“The U.S. is the largest natural gas producer in the world. We now have one of the largest supplies in the world,” said Hersh. “Were the third largest oil producer. We’re the largest coal supplier. Were not a resource poor country.”

The rapid growth in natural gas production that has been reshaping North America’s energy landscape, has in a few short years turned the United States into a potential exporter of natural gas from a country on the cusp of becoming a major importer.

via How Natural Gas Is Changing the Global Energy Market – CNBC.