The diverging paths of gold and oil in 2014

Gold is a commodity that in the real world doesn’t get used for a whole lot of truly important things, but is seen as a financial asset, and always has been.

Oil is a commodity that in the real world makes modern life possible, gets used for many, many important things, and yet is also seen as a financial asset. It hasn’t always been as that last descriptor, but it’s been that way for awhile.

In the past year, the fundamentals of the industrial asset–oil–ripped through the market in the last few months of the year and sent the price of that commodity plunging. And during that same year, the so-called “safe haven” of gold actually turned out to be something like that in the face of global upheaval, after an extremely bearish 2013. The metal’s price basically didn’t do much of anything over the course of the year.

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Let’s gather ‘round the Platts Christmas Tree…

…and tell old stories of when the price of oil was $100 per barrel and it seemed everybody was happy.
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Obama veteran questions State Dept. jurisdiction on XL pipeline

The Obama administration has taken a lot of heat over its years-long review of the Keystone XL pipeline. Among the questions is whether the Department of State, where the project is still under consideration, should even have the authority to decide whether a pipeline crossing the border with Canada or Mexico is in the national interest.

Most of the criticism comes from Republicans, who are certain to raise the issue again in January, when they take control of the Senate as well as the House of Representatives, and the oil industry. But add to that list now the woman who until recently headed the Pipeline and Hazardous Materials Safety Administration for the Obama administration.

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Chinese oil demand: a new export force in the world

A big net importer of crude oil or oil products doesn’t just import. It might export too, a lot, and the US is a prime example of that. The US remains a net importer of about 5 million b/d or less of total petroleum barrels, yet is the single biggest exporter of oil products in the world.

China isn’t quite at that level yet, but what started out as an interesting quirk in the data earlier this year is now clearly a trend: China is a net exporter of oil products. You can see our analysis of the November figures here.  

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How the oil price slide will spill into steel markets

Years ago, US Steel got into the energy business with the acquisition of Marathon Oil and Texas Oil & Gas. The thinking at the time was that steel and energy markets were countercyclical: when the steel market was soft, energy markets likely would be strong and vice versa.

We’re not sure what was behind that thinking and the resulting steel/energy conglomerate, USX Corp., was ultimately broken up by famed vulture capitalist cum shareholder activist Carl Icahn. This was part of another 1980s trend of investors seeking “pure plays,” companies focused on a single market or product.

Today the steel and energy markets don’t seem very countercyclical. American hot-rolled coil (HRC) producers and customers that make oil country tubular goods (OCTG) from the basic sheet steel product agree that their energy sector businesses will be seriously impacted early next year by the precipitous fall in oil prices, which are down more than 40% from earlier this year.

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Regulation & Environment: Colombia tries to turn its oil business around

Just a few years ago, Colombia was being touted as one of the most successful countries in attracting foreign capital and then in turn boosting its output with that new funding. But things have turned, as Chris Kraul discusses in this week’s Oilgram News column, Regulation & Environment.

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Controversy arises over making sure there’s enough US Northeast electricity capacity

Electricity capacity markets are between a hot and a cold place.

They are bracing for a repeat of last winter’s cold weather while preparing for more stringent emissions restrictions that are, in part, designed to address global warming.

Those strains are nowhere more evident than at the PJM Interconnection, which runs the largest wholesale electric power market in the US.

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Frankly, my dear, I don’t give a damn: oil and Libya this week

It was supposed to be one of the few things that could stop oil prices from falling further: a major producer in the Middle East closing oil export terminals due to heavy fighting in the area.

Last weekend Libya’s state-owned National Oil Corporation declared force majeure from Ras Lanuf and Es Sider, two ports in the eastern part of the country with a combined capacity of 560,000 barrels per day.

What was the response by oil traders? Not much. On Monday, Brent futures dropped 79 cents.

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Colbert, Bordoff and oil

Getting on the final week of The Colbert Report is a real coup, particularly when you’re one of many experts out there talking about oil prices.

Jason Bordoff, who has established a thriving energy center at Columbia University and has written guest posts for The Barrel, scored that very gig on Colbert this week, talking about the oil price collapse. And he tried mightily to stay serious when face-to-face with the Colbert character. You can see it here. 

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Figuring out the proper time to sell a bear market

Guest blogger Jonathan Kingsman is the founder of Kingsman SA, which is now a unit of Platts, and he remains a Platts consultant.

It is never too late to sell a bear market. Or at least so the saying goes.

With the oil markets falling out of bed and the Thomson Reuters/CoreCommodity CRB Commodity Index down nearly 14% from the start of the year — and down nearly 25% from its mid-year highs — the trend in commodity prices is decidedly lower.

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