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Submitted by Nick Cunningham via OilPrice.com,

Natural gas prices are surging as cold weather eats into U.S. inventories, tightening the market much more quickly than many analysts had expected.

The blast of Arctic weather in December put a strain on natural gas markets, with millions of people cranking up the heat to keep warm. The EIA reported a surprise drop in storage levels in the week ending on December 16, falling by 209 billion cubic feet. That decline puts total storage levels at 3,597 Bcf, or just a small 78 Bcf above the five-year average.

(Click to enlarge)

Such a scenario was difficult to imagine earlier this year, when the U.S. was emerging from peak winter demand season with record levels of gas sitting in storage. Flush with supply, prices crashed below $2/MMBtu. But natural gas production suddenly started to fall after years of blistering growth, upending forecasts calling for years of oversupply. Meanwhile, demand continues to rise as gas-fired power plants replace coal, so while natural gas consumption is highly seasonal, the seasonal peaks are getting taller and the valleys are getting shallower. Structural demand will continue to rise.

By mid-December, Arctic weather descended on much of the U.S., pushing temperatures to extremely low levels. As a result, the heating degree days (HDD) – a measure of demand for gas pertaining to home heating – was 11 percent above average.

But seasonal shifts still matter. In the first three weeks of December U.S. natural gas consumption averaged 92 billion cubic feet per day (Bcf/d), up 21 percent from year-ago levels and also 17 percent above the five-year average. In other words, the U.S. is consuming natural gas at record levels, leading to a much faster drawdown in inventories than had been predicted earlier this year.

The end result is that natural gas prices are surging, topping $3.70 per million Btu (MMBtu), the highest price in years. The tightening of the market and the rise in prices is a godsend for struggling gas drillers, which had fallen out of favor with investors in recent years because of persistently low prices. Chesapeake Energy, one of the largest natural gas producers in the U.S., has seen its share price spike by more than 300 percent this year, and it’s also up by more than a third in just the past few months, reflecting the rise in gas prices.

As the market improves, natural gas drillers are starting to do something that they have not one in years: add rigs back to the gas fields. Natural gas production climbed for years, right through until early 2016, even though gas producers suffered from years of low prices. The reason is that even as natural gas drilling stopped growing, the mad dash for oil led to rising output of associated gas. So even as the gas rig count fell, output did not, that is, until the crash of oil prices led to a drying up of oil drilling.

Now, rising gas prices could lead to an uptick in gas drilling as companies once again return to targeting gas formations specifically. The gas rig count is now up to 129, up more than 30 percent in just the past few months. Most of those extra rigs have been deployed in the Marcellus and Utica Shales in Pennsylvania and Ohio, along with the Haynesville Shale in Louisiana, a few of the most gas-rich areas of the country.

The coal industry could get a temporary reprieve with higher natural gas prices. 2016 is expected to be the first full-year in which gas controlled a larger market share than coal, and while the trend towards gas is expected to continue, coal plants could be called upon more often in the near-term because of tightening gas supplies.

While drillers and coal miners are excited about rising gas prices, costlier gas is not good for many others. Petrochemical companies, using gas as a feedstock for a range of products including plastics and fertilizer, will have to pay more. So too will consumers. LNG exporters, depending on how their contracts are structured, could take a hit. U.S. LNG could become less competitive abroad.

It remains to be seen if output will rebound quickly. If not, a cold winter and rising structural demand for gas could see further gains in prices, potentially topping $4/MMBtu before the start of injection season in the spring. Regional bottlenecks could emerge once again, with prices temporarily spiking much higher. In the winter of 2014, bottlenecks and shortages led to a massive price spike for New England, which is less likely but not entirely out of the realm of possibility either.

The shale gas revolution made headlines long before the boom in oil drilling. Shale gas could once again become a point of focus for the industry.

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A federal appeals court for the District of Columbia has breathed new life into the Hillary email-gate scandal which will be music to the ears of Trump’s “lock her up” supporters.  The case was filed by watchdog groups Judicial Watch and Cause of Action seeking to force the State Department to instruct the Department of Justice to file a federal records suit to recover Hillary’s missing emails.  A lower court had previously ruled that the State Department’s efforts to recover Hillary’s emails were sufficient and threw the cases out.  But D.C. Circuit Judge Stephen Williams, a Ronald Reagan appointee, had a different view.  Per The Hill:

U.S. District Court Judge James Boasberg had previously ruled that state’s efforts to recover the documents — tens of thousands of which Clinton turned over voluntarily in 2014 — were sufficient and threw out the cases.

 

But the three-judge appeals court panel on Tuesday said that State had not done enough.

 

“Even though those efforts bore some fruit, the Department has not explained why shaking the tree harder — e.g., by following the statutory mandate to seek action by the Attorney General — might not bear more still,” D.C. Circuit Judge Stephen Williams, a Ronald Reagan appointee, wrote in the court’s opinion. “It is therefore abundantly clear that, in terms of assuring government recovery of emails, appellants have not ‘been given everything [they] asked for.”

 

“Absent a showing that the requested enforcement action could not shake loose a few more emails, the case is not moot.”

 

While the new opinion acknowledges that DOJ involvement would be rendered moot if the defendants could provide definitive proof that additional efforts wouldn’t result in the recovery of additional emails, it also highlights that no such “factual support” has been presented to date.

Tuesday’s ruling does not order the State Department to make the referral to the DOJ — nor does it obligate DOJ to sue Clinton if presented with a referral.

 

But the language of the ruling does appear to suggest that the court considers the possibility that the DOJ’s involvement could uncover more emails.

 

“While the case might well also be moot if a referral were pointless (e.g., because no imaginable enforcement action by the Attorney General could lead to recovery of the missing emails), the record here provides no factual support for finding mootness on that basis,” Williams wrote.

Judicial Watch president Tom Fitton praised the ruling saying that it is now up to the Trump administration to determine whether they would like to “finally enforce the rule of law and try to retrieve all the emails Clinton and her aides unlawfully took with them when they left the State Department.”

“The courts seem to be fed up with the Obama administration’s refusal to enforce the rule of law on the Clinton emails,” Judicial Watch president Tom Fitton said in a statement.

 

“This ruling means that the Trump Justice Department will have to decide if it wants to finally enforce the rule of law and try to retrieve all the emails Clinton and her aides unlawfully took with them when they left the State Department.”

Of course, Trump has waffled on the issue of pursuing Hillary’s latest scandal any further.  After once telling her during a debate that she’d “be in jail” if he were President, Trump has since said that he has no interest in hurting the Clintons…a stance that we suspect may anger some of his supporters.

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Submitted by Charles Hugh-Smith via OfTwoMinds blog,

I resolve to acquire skills, not credentials.

Here's a grab-bag of resolutions with something for just about every persuasion.

1. I resolve to never utter or write the word "Trump" in 2017. (Good luck with that…)

2. Having watched bitcoin rise from $250 (or perhaps from $25 or even 25 cents) to $900+, I resolve to finally buy some bitcoin before it soars over $1,000. (Please file under "this is intended as bemused commentary, not financial advice.")

3. I resolve to lose the weight I should lose by changing my entire mindset and way of life rather than by following a diet.

4. I resolve to accept the reality that the two political parties are devoid of productive ideas and solutions, because real solutions would hinder the parties' primary purpose, which is vacuuming up contributions to fund their eternal grab for power.

5. I resolve to stop watching network and local TV "news." (If it bleeds, it leads.)

6. I resolve to cancel my subscription to the Washington Post and every other newspaper and magazine that hyped the fact-free, evidence-free claim that Putin was responsible for the Democrats losing the election.

7. I resolve to adopt an exercise/fitness plan I can actually follow: one sit-up a week, one jumping jack a week, etc.

8. I resolve to accept that living in my parents' basement playing videogames all day is not a trajectory into responsible adulthood.

9. I resolve to let go of the costly fantasy that yet another masters degree will yield the high-paying secure career I want.

10. I resolve to acquire skills, not credentials.

11. I resolve to rebel against the consumerist mindset deftly encapsulated by Caroline Caldwell: "In a society that profits from your self-doubt, liking yourself is a rebellious act."

12. I resolve to not let the dessert cart on the Titanic go by.

13. I resolve to rebel against the ugliness around me by seeking beauty in all its manifestations.

14. I resolve to start fixing the world's problems by fixing my own problems first.

15. I resolve to waste less energy, food, time and resources.

16. I resolve to save 50% of my net income to invest in myself and my family. (Only for the toughest of the tough…)

17. I resolve to stop blaming others for my self-generated difficulties.

18. I resolve to focus daily on gratitude and opportunity.

19. I resolve to remember that the jerk who cut me off on the highway may be having a day that's even worse than mine.

20. I resolve to make myself useful to myself and others in some way every day.

21. I resolve to Vote with My Feet.

Lagniappe resolution: I resolve to use words like lagniappe from time to time.

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Despite the FTSE 100 soaring to new record highs, Britons are holding onto their cash in a sign that they may be hunkering down in the face of economic uncertainties, according to the British Bankers Association.

As Bloomberg reports, personal deposits grew an annual 4.8 percent in November, data compiled by the BBA show. They increased by 32.4 billion pounds ($39.7 billion) in the first 11 months of the year, outstripping the 19.8 billion-pound growth in the same period of 2015.

 

And while FTSE 100 breaks to new record highs today…

 

But while the economy has held up well so far, most economists foresee a slowdown in 2017 as businesses seek more clarity on the nation’s future relationship with the world’s largest trading bloc.

“We’ve seen personal deposits, in particular, grow more strongly in recent months as consumers hoard cash in the absence of higher-yielding, liquid investment opportunities,” BBA Chief Economist Rebecca Harding said.

 

“This growth in personal deposits may also suggest that consumers are looking to grow their cash reserves against potential economic uncertainties, such as an expectation of lower wage growth.”

 

“Slower economic growth in 2017 is likely to result in pressure on employment with a risk of a rise in unemployment,” said Martin Ellis, housing economist at Halifax. “This deterioration in the labor market, together with an expected squeeze on households’ spending power, is likely to curb housing demand.”

So – stocks at record highs and the citizenry hoarding cash due to economic uncertainty – makes perfect sense in this new normal.

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Markets are trading off a bit here, as Dow 20,000 proves to be wonderfully elusive. Since everyone expected we’d reach 20k by New Year’s, we’ll probably never reach it at all.

Heading into 2017, it’s important to formulate a gameplan and prepare for any headwinds that might pose a problem for the stability of markets — else you’re just shooting in the dark — like morons.

Here are some things to pay attention to in 2017.

Trump’s anti-China rhetoric may start yielding some poisonous berries. Pay close attention to the USD/CNH and USD/CNY crosses. The FX markets will tell you all you need to know about China. Should you see their FX reserves shrink at the same time their currency drops, you know there is a flight of capital from China — which is bound to dry up liquidity and cause market dislocations. Remember, unlike our markets, the Chinese market is still traded and owned by ordinary people, traditionally weak hands. Plus, they’re so overleveraged, the slightest hiccup will literally destroy them.

The yuan is a constant downtick, which helps their exporters and pisses off Trump.

The US dollar index is at 14 year highs and continues to surge. Bad, bad, bad for US exporters.

American borrowing costs are surging at the same time that optimism for Trump fiscal stimulus projects buoy markets. This is counter-intuitive. Higher borrowing costs places a strain on our balance sheet and also makes it harder for Trump to enact stimulus, the whole basis of the recent 10% rally.

Crazy Grandma Yellen wants to hike 3 times in 2017, while the dollar is at 14 year highs, inflation is non-existent and has openly stated she’d hedge any fiscal stimulus by Trump with monetary tightening in order to stave off inflation — since we’re at ‘full employment.’

Last but not least, French elections will be held on April 23rd, 2017. If Le Pen gets elected, she will remove France from both the EU and NATO — something that only a deranged lunatic would liken to being bullish for stocks. This is a major event in a major EU nation, which might and quite literally lead the way towards the total collapse of the union.

 

 

Content originally generated at iBankCoin.com

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As OPEC, which currently is pumping crude at a record rate yet has managed to fool algos and “experts” into bidding up crude to multi-month highs on “promises” it will cut a little over 1 million bpd in output starting in 2017, an “agreement” which Russia and other Non-OPEC nations may or may not join depending on whether OPEC states comply with the cuts (Russia has made it very clear it won’t start cutting for a a while in the new year), a problem OPEC has long hoped to avoid mentioning, let alone addressing, has emerged. We are talking, of course, about US shale, the biggest marginal swing producer in the world.

The problem, in a nutshell, is one of clean balance sheets (those companies which had to file bankruptcy, have done so by now, and as a result most now have a far lower All-In Production Cost, not to mention far less debt, and re-energized management teams) as well as one of rising efficiency due to drilling technological advances. Nowhere is this more evident than in this excerpt from Bloomberg:

[A]t 8.8 million barrels a day, the U.S. is already pumping almost as much crude as two years ago, with just a third of the rigs it operated at the peak, data from Baker Hughes Inc. and the Energy Information Administration show.

And while drillers have added about 200 rigs since May according to Baker Hughes, taking advantage of rising prices as talk of an OPEC supply cut circulated, one wonders what will happens to US oil production once the number of rigs returns to its recent historical levels between 1,800 and 2,000?

One thing we do know is that after two years of quietly avoiding the spotlight, the shale industry is ready to return with a bang, and according to Reuters, “US shale drillers are set to ramp up spending on exploration and production next year as recovering oil prices prompt banks to extend credit lines for the first time in two years.”

The credit increase is small, but with major oil producers worldwide aiming to hold down production in 2017, U.S.-based shale drillers are looking to boost market share to take advantage of higher prices, and greater availability of capital will make that easier. 

 

North America-focused oil and gas producers are expected to increase capital investments by 30 percent in 2017, according to analysts at Raymond James. A number of shale producers including Pioneer Natural Resources, Diamondback Energy and RSP Permian have forecast bigger budgets and increased output for next year.

 

Every six months, oil and gas producers negotiate credit with banks based on the value of reserves in the ground. Through the latest round of talks in the fall, 34 companies had their available credit lines raised an average of about 5 percent, or more than $1.3 billion, according to data compiled by Reuters.  The combined bank credit for the companies stood at $30.3 billion, compared with $28.9 billion at the end of spring 2016.

 

The industry’s available credit had been cut by 40 percent over the past three reviews as it contended with a two-year price rout. “The ‘animal spirits,’ seem to be coming back to the exploration and production market, albeit slowly,” said Reorg Research analyst Kyle Owusu, referring to the human emotion that drives confidence.

 

Of the 34 companies, 12 saw increases of 5 to 90 percent, while 10 companies had their borrowing bases cut in the latest round, and 12 companies’ credit limits were left unchanged.

Curiously, despite the recent renaissance within shale, overall U.S. crude oil production is forecast to fall to 8.8 million barrels per day in 2017 from 8.9 million bpd this year, according to the DOE. But, according to many analysts, shale output could increase from 200,000 to 500,000 bpd in 2018.  Furthermore, according to a Citi report, if oil prices jump by another $10 from the current level of ~$50, shale output could quickly rise by a further 500,000 barrels.

Still, some such as SocGen head of commodities research Mike Wittner,, believe that shale companies could struggle to revive output quickly enough to disrupt the re-balancing of the oil market. “It’s going to take them a while to gear up,” Wittner said. “The investment’s got to gather pace, the drillers and the fracking contractors also need time. It’s a gradual process.”

And then there are those like commodity expert Ritterbusch & Associates who believe that US shale will be able to return to recent output levels far faster than consensus, and certainly OPEC believes.

According to a recent report by Ritterbusch, US drillers are returning to work at a pace that will threaten the tenuous agreement among OPEC and other major producers to cut output.  

“It appears OPEC is already furthering a US shale recovery despite the fact that OPEC cuts have not even begun,” Ritterbusch & Associates writes, pointing to the rapidly rising rig count and increased output from US fields.

As a result, and taking a contrarian stance to the consensus, Ritterbusch now expects US oil production to rise to 9 million bpd as soon as the end of Q1 in 2017, from 8.8M currently.

Such an accelerated return to production  would not only allow US producers to grab “a significant portion of OPEC’s market share,” but more importantly would cause the OPEC production cut agreement to break apart as early as next spring, Ritterbusch says, as Saudi Arabia once again panics and scrambles to recapture market share lost not to Iran and/or Iraq this time, but to a newly resurgent US shale industry, which as a reminder, is what caused the historic OPEC cartel breakdown on Thanksgiving 2014 which sent the oil price crashing and from which it has yet to recover.

As a reminder, all this excludes the all too high likelihood of a surge in production from previously mothballed regions like Nigeria and Libya, both of which are aggressively ramping up output to recapture long lost market share, and are willing to aggressively underbid the competition in the process.

If Ritterbusch is right, buy lots of 6 month Brent/WTI puts, because today’s high price will be a fond memory once the latest OPEC agreement collapses as it becomes every oil producer – and shale – for himself.

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Following his earlier tweet to president-elect Trump thanking him for his “warm friendship,” Israel PM Benjamin Netanyahu lashed out at US Secretary of State John Kerry’s speech as “biased against Israel,” as he said Israel “will never have true peace” with the Arab world if it does not reach an accord based on Israelis and Palestinians living in their own states.

This follows acusations that The White House was being the vote…

As Reuters reports,

“Despite our best efforts over the years, the two-state solution is now in serious jeopardy,” Kerry said at the State Department. “We cannot, in good conscience, do nothing, and say nothing, when we see the hope of peace slipping away.”

 

“The truth is that trends on the ground – violence, terrorism, incitement, settlement expansion and the seemingly endless occupation – are destroying hopes for peace on both sides and increasingly cementing an irreversible one-state reality that most people do not actually want.”

 

Kerry condemned Palestinian violence which he said included “hundreds of terrorist attacks in the past year.”

 

His parting words are unlikely to change anything on the ground between Israel and the Palestinians or salvage the Obama administration’s record of failed Middle East peace efforts.

 

The Israelis are looking past President Barack Obama and expect they will receive more favorable treatment from Trump, who takes office on Jan. 20.

Bibi was busy tweeting this morning…

President-elect Trump, thank you for your warm friendship and your clear-cut support for Israel! ????????????????@IvankaTrump @DonaldJTrumpJr https://t.co/lURPimG0wS

— Benjamin Netanyahu (@netanyahu) December 28, 2016

And his office issued a statement”

“Like the resolution that John Kerry advanced at the UN [Security Council], John Kerry gave a skewed speech against Israel. For over an hour, Kerry dealt obsessively with the settlements and almost didn’t touch on the root of the conflict — the Palestinian opposition to a Jewish state in any boundaries,” a statement from the Prime Minister’s Office says.

Bibi is due to make a statement on Israel national TV at 1345ET…

Alternate Live Feed:

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The Founding Fathers protected freedom of speech and freedom of the press as the most important liberties.

They are protected in the First Amendment to the U.S. Constitution.  And as discussed below, the Founders recognized that the ability to speak freely was the foundation for all other freedoms.

Thousands of years of history shows how rare and valuable such freedoms really are …

Socrates

Socrates was killed in 399 BC for “failing to acknowledge the gods that the [government] acknowledges”.

Using the Printing Press

Before the invention of the movable type printing press by Gutenberg, the church controlled the production of books.

Gutenberg’s invention allowed cheap production of books. This challenged the monopoly on books by the church, and thus allowed different viewpoints to be heard.

For example, when Martin Luther posted his “95 Theses” on a church door criticizing the corrupt Catholic practice of selling “indulgences” – paying the church in return for a reduction of your time in purgatory – the printing press spread his writings throughout all of Germany in 2 weeks, and throughout “all of Christendom” within a month.   This launched the Protestant Reformation, and challenged the power of the Catholic church.

So Pope Alexander VI issued an edict against unlicensed printing in  15o1.

And in 1535, Francis I of France prohibited – under penalty of death – the printing of any books.

William Tyndale

William Tyndale was killed in 1536 for translating the Bible into English so that everyone could read it for themselves, and no longer had to rely on the clergy to tell them what it said.

Unlicensed Printing

In 1585, the Star Chamber assumed the right to confine printing to London, Oxford and Cambridge, to limit the number of printers and presses, to prohibit all publications issued without proper license, and to enter houses to search for unlicensed presses and publications. The search for unlicensed presses or publications was entrusted to an officer called the ” messenger of the press.”

In 1557, Henry II made the collecting of prohibited books punishable by death or imprisonment.  An in 1559, he made it punishable by death to print without royal authority.

Galileo

In 1616 and 1633, Galileo was tried for saying that the Earth revolves around the Sun, instead of agreeing with the church’s “mainstream” view that the Sun revolves around the Earth.

Heretics and Critics

Many people have been killed over the centuries for saying anything that the church authorities of the day disliked.

And the British monarchy punished anyone caught with materials criticizing the monarchy, which they labeled as “libelous” or “scandalous”, even if what was written was true.

(Indeed, the ransacking of houses by authorities searching for “heretical” and “libelous” material was so common that it was the main reason the Founding Fathers wrote the Fourth Amendment to the Constitution, prohibiting unreasonable “search and seizure”).

Benjamin Franklin

In 1773, Ben Franklin was fired as colonial Postmaster General for informing the American Colonists about what the British were really doing.

Strongmen

Strongmen of all stripes have cracked down anyone who insults the strongman or criticizes his policies.

Book Burnings

In 1933, the Nazis carried out numerous book burnings of authors such as Einstein, Freud, Kafka, Hellen Keller, Jack London, Thomas Mann, Proust, Upon Sinclair and H.G. Wells because their writing book “acts subversively on our future or strikes at the root of German thought, the German home and the driving forces of our people…”

There have been many other book burnings throughout history.

Mussolini

Mussolini had around 2,000 people killed because they challenged the dictator.

Stalin and the Soviet Union

Stalin murdered or through into insane asylums countless people who criticized the Soviet government or Communism.

Other Communist Regimes

China’s Mao and other Communist leaders killed people who failed to sign the Great Leaders’ praise.

CIA

In 1972, CIA director Richard Helms relabeled dissenters as “terrorists”.

Reporters

The extremely popular tv personality Phil Donahue’s show – the most popular on MSNBC – was canceled for questioning the wisdom of the Iraq war.

Indeed, many reporters have been fired, harassed, spied upon and even accused of terrorism for reporting stories critical of government actions or policies.

Protect What Makes Us American

Those in power are always tempted to censor and punish critical speech and reporting.  George W. Bush said “You’re either with us or your against us”, and cracked down on criticism and protest.

Some powerful Democrats now want to suppress right-wing speech.

But freedom of speech and of the press – no matter how much we may disagree with and even hate what someone else says – is the bedrock of America.

If freedom of speech is taken away, then dumb and silent we may be led, like sheep to the slaughter.”
– George Washington

“Whoever would overthrow the liberty of a nation must begin by subduing the freeness of speech.”
– Ben Franklin

“Freedom of expression is the matrix, the indispensable condition, of nearly every other form of freedom.”
– U.S. Supreme Court Justice Benjamin Cardozo

“The framers of the constitution knew human nature as well as we do. They too had lived in dangerous days; they too knew the suffocating influence of orthodoxy and standardized thought. They weighed the compulsions for restrained speech and thought against the abuses of liberty. They chose liberty.”
-U.S. Supreme Court Justice William Douglass

“If there be time to expose through discussion the falsehood and fallacies, to avert the evil by the processes of education, the remedy to be applied is more speech, not enforced silence.”
-U.S. Supreme Court Justice Louis D. Brandeis

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