SPECIAL REPORT
| February 14, 2012
Is the worst yet to come? A new bottleneck is lurking beyond Cushing
The WTI -Brent arb has widened in recent days, but congestion pricing for WTI is expected to subside with the addition of pipeline capacity from Cushing to the U.S. Gulf Coast ( USGC ). However, rising U.S. shale oil output has created the risk of new bottlenecks that could continue to detach U.S. crudes from global benchmarks. In this report, we analyze the risk factors and market implications of what could be the most disruptive of these: a supply glut in the USGC that triggered an LLS -.....
SPECIAL REPORT
| February 09, 2012
The Light Louisiana Sweet (LLS) Market: Overview and Short-Term Outlook
In light of the disconnect between WTI and Brent prices, LLS has emerged as a “secondary benchmark” in the U.S. Gulf Coast ( USGC ) due to its closer correlation to global crude prices, its diversified base of buyers and sellers, and the growth of an LLS swaps market in CME and ICE . Yet, the structure of the LLS trade is seldom discussed in depth. In this Special Report, we describe the main features of the LLS market and analyze its possible evolution through 1H13.
SPECIAL REPORT
| February 02, 2012
Waiting for Godot: Scant gains in impaired sectors and among the less educated likely to prolong labor market recovery
The recovery in the labor market has been incremental at best with millions still unemployed which is perhaps one reason why many people maintain that the current recovery does not feel like a recovery. A closer look at the nonfarm payrolls data reveals a more nuanced view with the structurally impaired sectors dragging down the labor market (Establishment Survey) and the educated outperforming the less educated by large margins in the job market recovery (Household Survey). The labor market i.....
SPECIAL REPORT
| January 13, 2012
Fracking-Induced Tremors? Those earthquakes can get expensive!
Underground disposal well can trigger earthquakes and we had known about that since 1968. This special report analyses the steps (and missteps) that led to the Ohio earthquake on New Year’s Eve. Although there is no evidence directly linking hydraulic fracturing to induced seismicity, waste water management practices associated with hydraulic fracturing are likely responsible for the earthquakes.
DATA INSIGHT
| January 09, 2012
(Re)balancing Act: Largest inflow and outflow likely in Brent and WTI respectively
The rebalancing of the value weights for the Dow Jones- UBS (DJ UBS ) and S&P GSCI ( SPGSCI ) commodity indices is expected to have the highest impact on the flow of funds for WTI and Brent followed by natural gas. The rebalancing process will occur over five business days from January 9 to 13 with 20% of the total change occurring during each of those days using the closing price of futures contracts on that day. • Our model for estimating index investment (used in our Commitment of T.....
SPECIAL REPORT
| January 03, 2012
RESEND: Iraq's political crisis: upside price pressure through year's end and beyond
Note: While Iran’s military exercises in the Strait of Hormuz have dominated today’s headlines, we believe it is important not to lose sight of the rapidly deteriorating sectarian relations in Iraq that further complicate the geopolitical outlook. In fact, earlier this morning, news agencies reported that the Sunni-backed Iraqiya coalition boycotted today’s parliamentary meeting, while the Kurdish Alliance momentarily walked out of the session. Hence, we have decided to resend our latest Spec.....
SPECIAL REPORT
| December 29, 2011
Iraq's political crisis: upside price pressure through year's end and beyond
As the last U.S. combat troops left Iraq, political turmoil has surfaced at the highest echelons of the Iraqi government. Shiite Prime Minister Nouri al-Maliki’s ruling coalition faces a crisis following his government’s attempt to arrest the Sunni Vice-President Tariq al-Hashimi on terrorism charges. Underscoring the gravity of the situation, leaders of al-Hashimi’s political coalition, al-Iraqiya, published yesterday an op-ed in The New York Times stating that Iraq “stands on the brink of disa.....
SPECIAL REPORT
| December 16, 2011
Cycling Natural Gas Storage: Operational flexibility provides further downside price risk
Withdrawals are essential to inventory management. And as boring as that might sound, verification of inventory is crucial to determine deliverability and structural integrity of a storage field, hence its economic viability and safety. This special report explains why the flexibility provided by technical management of storage reservoirs can determine the floor on 2012 gas prices.
SPECIAL REPORT
| December 15, 2011
OPEC's 30 mb/d announcement
Bullish or Bearish? Yesterday, OPEC announced that it would set a 30 mb/d production ceiling for the first half of 2012, until its next ordinary meeting in June. According to a statement from OPEC’s secretary-general, the figure includes production from both Libya and Iraq. What should be the impact of the statement, if any, on prices? In this special report, we argue that, to the extent that the OPEC meeting provides any new information to the market, it is slightly on the bullish side.
DATA INSIGHT
| December 01, 2011
Queasy Consumption: 3Q consumption likely led by lower savings and higher credit
Media reports about bumper Black Friday sales and the actual relative improvement in 3Q real personal consumption expenditure ( PCE ) have been fodder for suggesting that consumers are getting their groove back, raising hopes that the US economy is on its way out of the woods. • While US economic data has held up comparatively well in general, a detailed look reveals a disconnect between real personal income and consumption. • The improvement in personal consumption likely stemmed from a dip.....