1. Oil and the Global Economy
Oil prices fell sharply on Monday and Tuesday last week taking New York futures down from $81 a barrel to touch above $76 on Tuesday. Prices then recovered leaving NY oil to close out the week at $78.65, down 2.4 percent for the week and 27 percent since June. London futures performed similarly dropping from $86 to $83 on Monday andTuesday and then rising to close out the week at $83.39, down 2.9 percent for the week and 28 percent since June. The price drop on Monday and Tuesday came as the Saudis cut prices for shipments to the US. The rebound later in the week had a number of causes including much colder weather due to engulf the US this week and better jobs numbers.
As could be expected, forecasts that the polar vortex will return to the US this winter sent natural gas prices sharply higher – climbing from $3.65 per million BTUs in late October to a close of $4.41 on Friday. US natural gas production continues to break records with production in October running at 7.9 percent above last year with expectations that total US production will be above 72 billion feet per day by the end of the year. Robust production of gas this summer combined with mild weather have left US natural gas stocks only 7 percent less than the five-year average as the winter heating season starts.
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