Seasonally the energy markets will ease as we head into the summer, except for electricity demand. It happens every year. But, the underlying message is that, within the seasonal framework, energy supplies are still going to be tighter than in a normal year. Even if we are wrong on this because of economic slowdown, the fact remains that higher inventories, in our view, will reflect, softer demand, not sustainably larger supplies coming into the marketplace. In looking at petroleum, we see two related but generally independent industries, oil and gas, each with its own supply vs. demand characteristics.
Oil is a function of global concerns.
Natural gas is more of a North American story. The oil stocks move with rising and falling OPEC oil prices. The limits of refining capacity and gasoline inventories can adjust things a bit and give some leverage to certain oil stocks. But the key to oil is the global oil price and individual oil companies' exploration efforts. On the other hand, natural gas relates to supplies in the US and Canada, not just supplies in the ground but also availability, namely, pipeline transmission and distribution capacity.