What is Up with Natural Gas?

HenryTo · Posted: Tue Dec 26, 2006 11:00 am Post subject: What is Up with Natural Gas?

Since our December 17th commentary was published ("What is Up with Natural Gas?"), natural gas prices (basis the January 2007 contract) are already down by more than $1/MMBtu.

The contract is way oversold but a solid bottom is still nowhere in sight. For now, I prefer to sit and wait on the sidelines before buying anything natural-gas related (regulated pipelines notwithstanding). Watch out for Canadian producers especially since I believe the Canadian dollar is still way overvalued.

Best,

Henry

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rffrydr · Posted: Wed May 23, 2012 10:46 am Post subject:

UNG beats all subprime but synthetic BBB CDOs:

http://www.minyanville.com/business-news/editors-pick/articles/Chesapeake-Energy-CHK-US-Oil-Fund/5/21/2012/id/41090

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Today is the Tomorrow you worried about Yesterday!

HenryTo · Posted: Fri May 11, 2012 10:37 pm Post subject:

What is up with CHK? A disaster all 'round.

http://www.nytimes.com/2012/05/12/business/energy-environment/chesapeake-energy-might-delay-asset-sales.html?partner=yahoofinance

HenryTo · Posted: Wed May 02, 2012 3:03 pm Post subject:

CHK digging themselves into a bigger hole. Morningstar on CHK's 1Q earnings.

http://quicktake.morningstar.com/Stocknet/549511/chesapeake-reports-1q-results-reduces-2012-13-liquids-volumes-forecast-sizable-funding-gap-looms.aspx?symbol=CHK

rffrydr · Posted: Wed Apr 18, 2012 5:59 am Post subject:

GM's bi-fuel truck will plump up the price by...$10,000. That's not the way.

http://video.cnbc.com/gallery/?video=3000083113&play=1
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Today is the Tomorrow you worried about Yesterday!

HenryTo · Posted: Wed Apr 11, 2012 12:08 pm Post subject:

Front-month contract breaks below $2 on an intraday basis.

http://blogs.wsj.com/marketbeat/2012/04/11/natural-gas-breaks-2-barrier/?mod=yahoo_hs

HenryTo · Posted: Wed Apr 11, 2012 10:40 am Post subject:

Multiplier effects of cheap natural gas.

http://www.nytimes.com/2012/04/11/business/energy-environment/wider-availability-expands-uses-for-natural-gas.html?pagewanted=1&_r=1

rffrydr · Posted: Tue Apr 10, 2012 7:19 pm Post subject:

California to restart to mothballed NatGas units in "response" to San Onofre extended maintenance.
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Today is the Tomorrow you worried about Yesterday!

HenryTo · Posted: Tue Apr 10, 2012 6:24 pm Post subject:

Morningstar on CHK's ongoing asset sales.

HenryTo · Posted: Sun Apr 01, 2012 2:58 am Post subject:

Natural gas rig count up (from 652 to 658) for the first time in 12 weeks.

http://www.washingtonpost.com/business/industries/weekly-us-oil-gas-rig-count-of-1979-is-up-by-11-from-the-previous-week/2012/03/30/gIQAaTbmlS_story.html#

HenryTo · Posted: Fri Mar 30, 2012 1:12 am Post subject:

Natural gas bulls decimated (again) yesterday. Never-before-seen warmer-than-expected winter, all-time high production, and all-time high storage levels.

http://online.wsj.com/article/SB10001424052702303816504577311911947295928.html

rffrydr · Posted: Wed Mar 28, 2012 8:24 am Post subject:

Listening to Karl Case on housing yesterday and he drops his natgas conversion story at the end:

http://media.bloomberg.com/bb/avfile/News/Surveillance/vJzyHmA3VFjw.mp3

He can hardly believe the savings and doesn't understand why he sat on the fence so long. So much for the "rational consumer." Embarassed

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Today is the Tomorrow you worried about Yesterday!

HenryTo · Posted: Tue Mar 27, 2012 10:04 am Post subject:

Never thought I would ever see March spot sitting near a $1 handle ever again.
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Natural gas prices fall again on supply concerns

By The Associated Press – 43 minutes ago

NEW YORK (AP) — Natural gas prices fell again Tuesday amid doubts that a huge surplus of the fuel will be depleted anytime soon.

Natural gas futures fell 4 cents to $2.18 per 1,000 cubic feet after dropping 5 cents on Monday. That's a 10-year low and half of what natural gas was fetching back in July. Oversupply and mild winter weather have contributed to the plunge.

Any money that consumers are saving on natural gas may be going into the gasoline tank. The national average for regular gasoline in the U.S. is $3.90 per gallon. It's risen 17 cents in March and 62 cents since Jan. 1.
A private research group said Tuesday that high pump prices contributed to a decline in consumer confidence in March.

Meanwhile oil prices rose a day after Federal Reserve Chairman Ben Bernanke suggested that the central bank will continue its efforts to help spur U.S. job creation and economic growth.

Benchmark U.S. crude oil rose 25 cents to $107.28 per barrel. In London, Brent crude for May delivery fell 5 cents to $125.60 per barrel on the ICE Futures exchange.

Oil prices remain high because of ongoing tension over Iran's nuclear program. Oil has jumped from $75 a barrel in October because of concern that a military strike by Israel or the U.S. against Iran's nuclear facilities would disrupt global crude supplies.

Natural gas supplies are currently more than 50 percent above the five-year average for this time of year. That's due to a boom in production in Pennsylvania, Ohio, Texas and others states. Warmer than usual temperatures this winter also meant homeowners used less natural gas for heating than in years past.

Shiyang Wang, an analyst at Barclays Bank PLC, said in a research report that the market has turned its attention to whether the surplus gas in storage could be absorbed by hot summer weather and utilities opting to use cheap gas for power generation instead of coal. If storage is still abundant as summer ends, prices could remain low in October and November, the analyst said.

In other energy trading, heating oil fell 1 cent to $3.23 per gallon and gasoline futures dropped a penny to $3.40 per gallon.

HenryTo · Posted: Mon Mar 26, 2012 11:34 am Post subject:

Natural gas rigs down an 11 consecutive week to 652--its lowest level since May 2002.

http://www.reuters.com/article/2012/03/26/markets-nymex-natgas-idUSL2E8EN1P920120326

rffrydr · Posted: Fri Mar 23, 2012 7:14 am Post subject:

Refineries are powered by what? Yup, natgas. Maybe there's feather in this cap.
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Today is the Tomorrow you worried about Yesterday!

HenryTo · Posted: Thu Mar 22, 2012 2:46 pm Post subject:

Natural gas prices resume their decline.
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US natural gas futures slide after first 2012 stocks build

* Futures end lower after early start to stock building season

* Mild forecasts, record supplies also weigh on prices

* Coming up: Baker Hughes rig data, CFTC trade data Friday

By Joe Silha

NEW YORK, March 22 (Reuters) - U.S. natural gas futures ended lower on Thursday after a government report showed that gas inventories climbed last week for the first time this year, as a near-record mild winter triggered an early start to the stock-building season.

The U.S. Energy Information Administration report showed total domestic gas inventories for the week ended March 16 rose 11 billion cubic feet to 2.380 trillion cubic feet.

The build came about two weeks earlier than usual and was the first time in five years that storage registered a gain for that week.

Gas prices have been locked in a trading range roughly between $2.20 and $2.40 for the last two weeks, but with storage at record highs for this time of year, an early start in injections could spell more trouble for prices.

"The first net injection of the year comes slightly ahead of seasonal norms, but doesn't come as a surprise given the unsupportive weather this shoulder season," Mike Tran, analyst at CIBC World Markets, said in a report.

Front-month gas futures on the New York Mercantile Exchange finished down 9.1 cents, or nearly 4 percent, at $2.269 per million British thermal units, after sliding to $2.25 right after the EIA report. The nearby contract hit a 10-year low of $2.204 early last week.

Record high supplies and a mild March have driven front month futures down 13 percent this month and sharply widened spreads to winter contracts, with the December premium to April spiking 30 percent in the last three weeks to about $1.03.

Despite declines in gas drilling, output cuts by producers and unexpected nuclear plant outages, mild weather for much of the winter sharply slowed overall demand and built up a huge inventory surplus that could limit price gains this year.

Traders said record-high gas production, primarily from shale, has also driven prices lower.

AccuWeather.com expects temperatures in the Northeast and Midwest, key gas-consuming regions, to mostly average above normal for the next two weeks, with daytime highs frequently climbing above 60 degrees Fahrenheit (15.6 Celsius).

INVENTORY GLUT, THE BIG PROBLEM FOR BULLS

The weekly inventory build was slightly above the Reuters poll estimate of 10 bcf. Stocks fell 20 bcf the same week last year, while the five-year average draw for that week is 17 bcf.

The surplus to last year widened by 31 bcf to 766 bcf, or 47 percent. The excess to the five-year average gained 28 bcf to 835 bcf, or 54 percent, a huge cushion to meet any spikes in demand or storm-related disruptions in supply this year.

(Storage graphic:)

Inventories seem set to finish the month at an all-time high well over 2.4 tcf, more than 55 percent above normal and easily above the previous March 31 record of 2.148 tcf set in 1983.

Early injection estimates for next week's EIA report range from 43 bcf to 58 bcf versus last year's adjusted build of 7 bcf and the five-year average decline for that week of 8 bcf.

Traders said the huge storage overhang could drive prices lower this spring as seasonal weather demand fades, and could pressure prices again late in the April-through-October stock-building season if storage caverns fill to capacity and force more supply into a well-supplied market.

RECORD PRODUCTION

Traders were waiting for the next Baker Hughes drilling rig report on Friday after last week's data showed the gas-directed count slid to 663, its lowest in nearly 10 years.

It was the 10th straight weekly decline and stirred more talk that historically low prices were finally forcing drillers to slow dry gas operations. (Rig graphic:)

But the slowdown has yet to be reflected in pipeline flows, which are still estimated to be at or near record levels.

Some analysts say the gas-directed rig count may have to drop below 600 to reduce flowing supplies significantly, noting the producer's shift to higher-value oil and gas liquids plays still produces plenty of associated gas that partly offsets any reductions in pure dry gas output.

Most analysts do not expect any major slowdown in gas output until later this year, adding it will be difficult to balance the gas market without serious production cuts.

BULLISH SIGNS

Cheap gas has helped tighten the supply-demand balance this year as manufacturers use more of the fuel and utilities switch to gas from pricier coal to generate power.

Nuclear plant outages have also been running above normal for the last month or so, adding as much as 1 bcf, or 1.5 percent, to potential daily gas demand. Gas is the fuel typically used to make up any lost nuclear generation.

On the supply side, low prices have slowed dry gas drilling and forced output cuts by several producers, which could trim 1 bcf or more from daily output.

But traders have mostly shrugged off signs that the market has been tightening.

Until production shows some concrete signs of slowing, few traders expect much upside, at least until summer air conditioning loads pick up.