An Energy Price Rise Two-Fer Today

by | Oct 4, 2021 | Wealth Management

pexels pixabay 162568

By:  Thomas Steffanci, PhD, Senior Portfolio Manager

A series of margin calls and OPEC’s reiterating its ongoing 400,00 barrels/ per day increase in output lit a further surge in natural gas and oil today. Hedge funds and large traders have been making bets that natural gas prices in the U.S. would rise faster than in Europe. So, they shorted natural gas futures in Europe (via a futures exchange in the Netherlands) and were long U.S. natural gas. The explosion in European demand and tight supplies for natural gas over the past few weeks unleashed huge margin calls, forcing those dealers and hedge funds to come up with more cash forcing a covering of short positions to do so. Margin calls were a record shattering $30B. With OPEC+ sticking to its existing pricing strategy despite calls to increase output beyond that, Brent oil prices surged to $80/bbl., with West Texas Intermediate Crude (WTIC), topping $78 intraday. In a world where central banks tend to focus on core inflation (excluding food and energy) rather than headline inflation (including food and energy), will central banks look past the energy price shocks we are seeing?

Disclosure: BFSG does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to BFSG’s web site or blog or incorporated herein and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please see important disclosure information here.

Latest From The Blog

Archives

Our Services

Investment Management

Tailor portfolios to your needs and goals.

Retirement Planning

Investing and saving wisely is vital to success in retirement.

Financial Planning

Navigating the complexities of your financial affairs can be simplified.

Tax Management

Help to increase the amount you “take home”.

Estate Planning

Protect your loved ones and make sure your legacy endures.

Executive Compensation Analysis

Simplify the many options and decision points of executive compensation plans.

Education Planning

Confidently plan for your children’s future.

Charitable Giving

Give in a tax-smart, simple way.

*Please Note: Limitations.  The scope of services to be provided depends upon the terms of the engagement, and the specific requests and needs of the client. BFSG does not serve as an attorney, accountant, or insurance agent.  BFSG does not prepare legal documents or tax returns, nor does it sell insurance products.  Please Also Note: Different types of investments involve varying degrees of risk.  Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended and/or undertaken by BFSG) or any financial planning or consulting services, will be profitable, equal any historical performance level(s), or prove successful.

Sign Up For Our Newsletters

(They're great, we promise)

Connect With Us