Replies to This Discussion

Permalink Reply by Parkdota on January 4, 2011 at 17:48

Bring it.....every little bit helps...or at least is suppose to.  January natgas contract were depressing.  Thanks for post.

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Permalink Reply by P.G. on January 5, 2011 at 3:03

I think the news of weather events won't have much effect on NG prices. Aren't those price fluctuation generally driven by speculators betting on potential shortages? I mean it would take a lot more than just a cold snap to get someone to bet their money on scarce NG supplies, huh?

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Permalink Reply by Scott on January 5, 2011 at 4:14

I would agree with you if we didn't already have such record breaking cold back in December. Now, some are saying this might be the coldest Janurary since the early 1980s. Currently we're 8.2% above the 5 year average and they are expecting a much bigger withdrawl on Thurs that should hopefully wittle it down even more to 7.7% (being optimistic with that number). Throw in record breaking cold in the heart of the winter this month that is sustained for 3 weeks according to the numerous weather outlooks, I'll venture to say we won't be anywhere near the record storage you speak of at the end of the winter.

 

Also, throw in an improving economy. Have you seen some of the economic reports over the last couple week? Our recovery is gaining steam which should only help to increase our NG demand.

 

October's Natural Gas Production actually even declined in the lower 48 per the last EIA report. Granted that could be a fluke OR it could be due to the decline in shale wells and the US Gas Rig Count has dropped 4 straight weeks to a 10 month low.

 

I have been quite bearish on gas prices for the last 6 months but we may (hope) be seeing a sign of a life in the nat gas market. I'm hoping we can continue to catch these short sellers with their pants down and they keep having to cover their bets.

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Permalink Reply by P.G. on January 5, 2011 at 4:27

If they could get China to buy up NG like they are buying up Oil...

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Permalink Reply by Scott on January 5, 2011 at 4:37

Wouldn't that be something.

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Permalink Reply by Parkdota on January 5, 2011 at 6:08

Scott, geat analysis.  I'm no expert but what has confused me is that keeping in mind last winter was above the norm frigid, we currently have lower storage than last year yet we are roughly 30% below last year's prices.  The two not correlating is hard to understand.  If anything, I'd expect a slight increase in pricing from the same time last year.

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Permalink Reply by P.G. on January 5, 2011 at 6:23

How high would oil prices be if they had oil fields all over the place being shut in due to over supply? Maybe the perception of the speculators is that any dip in NG storage supplies could be restored too easily. Easily enough that it wouldn't make a good bet with their money anyway..

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Permalink Reply by Scott on January 5, 2011 at 7:12

Good point. Let's just hope the operators don't pick up the rig count until prices reach a sustainable level.

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Permalink Reply by Scott on January 6, 2011 at 5:22

Another great withdrawl this week. Surplus narrowed to 6.5% from 8.2%. Definitely heading in the right direction with the heart of winter approaching quickly. And we have extreme cold coming that could be around during most of the month. 

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Permalink Reply by adubu on January 7, 2011 at 12:39

storage is ~200 bcf below last year at this time (but still ~200 bcf above 5 year avg) with a colder Jan-Feb expected this year the draw down should go below 5 year storage avg next month if not sooner and that should boost NG above $6 by March. The NG rig count continue to slowly drop as rigs move to oil and wet gas fields out of dry shale gas except drilling to hold leases.

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