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What is Up with Natural Gas? |
HenryTo
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 Posted: Tue Dec 26, 2006 11:00 am Post subject: What is Up with Natural Gas? |
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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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What is Up with Natural Gas? Replies |
rffrydr
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rffrydr
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| Posted: Thu Jun 03, 2010 10:58 pm Post subject: |
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Yup.....and here's some more, says the Madman:
Suddenly, Nat Gas Can Do No Wrong
By Jim Cramer
RealMoney Columnist
6/3/2010 2:50 PM EDT
| Quote: |
Natural gas is on a win streak. Today we learn that the EPA has finalized its sulfur-dioxide emissions limits, and to me they are another nail in the alleged clean coal coffin. That means we are a step closer to having more utilities switch over to cleaner, more plentiful natural gas. We haven't had new standards in 40 years, and we have some 40-year-old plants that I bet need to be retired off this EPA rule, which is being done in the absence of legislation to combat pollution.
When you combine the fact that the president did not mention cleaner coal -- because he was in a coal state, Pennsylvania, I believe -- and instead talked about "tapping our natural gas reserves" with the fact that he is backing the current proposal in Congress that would make it so trucking companies would be nuts NOT to switch to liquefied natural gas, things are happening very fast and very positively for nat gas.
The biggest nat gas plays, Conoco (COP - commentary - Trade Now) and Chesapeake (CHK - commentary - Trade Now), haven't seen much of a lift from this news. I think they can trend higher (we bought some COP this morning for Action Alerts PLUS). I also think that this EPA rule provides a real rationale for Exxon's (XOM - commentary - Trade Now) purchase of XTO (XTO - commentary - Trade Now), as Exxon made a point to say that the giant oil company is buying XTO as a power plant and heating play, not a auto or truck play. (Glenn Williams is less sanguine short term about the switch to natural gas, but I think that we have to keep it in front of us as a faster-track possibility.)
At the same time this news is just real bad for coal, adding to the woes of the mineral group, as per the Freeport (FCX - commentary - Trade Now) comments about China. (I read Joy Global's (JOYG - commentary - Trade Now) release, and I thought coal would have taken off on it, but FCX trumped everything. I reiterate that I do not like Peabody (BTU - commentary - Trade Now), Arch (ACI - commentary - Trade Now) or Massey (MEE - commentary - Trade Now). As for the utilities that want to retrofit, they will call McDermott (MDR - commentary - Trade Now) and Shaw (SHAW - commentary - Trade Now) and URS (URS - commentary - Trade Now) if you want to play that angle. (Thanks to Will Gabrielski at Gleacher & Co. for that insight.)
Some of us had gotten so jaundiced about natural gas because the president had always mentioned clean coal when talking about a preferred bridge fuel to a non-fossil age. I thought this announcement in his speech was totally game-changing, to the point where I am wondering if there isn't something coordinated with the EPA's final standard.
Lots of winners here, of course: Devon (DVN - commentary - Trade Now), Range (RRC - commentary - Trade Now), Atlas (ATLS - commentary - Trade Now), National Fuel Gas (NFG - commentary - Trade Now). But I would be remiss if I didn't stress Chesapeake, because the company's got nat gas all over the place and can take advantage of the expected switch by utilities to nat gas from coal. |
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rffrydr
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| Posted: Wed Jun 02, 2010 3:28 pm Post subject: |
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We got a mention...an honorable mention. Anyone who ever loved this trade better be in some--right now. 
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rffrydr
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| Posted: Mon May 31, 2010 4:26 pm Post subject: |
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Nice recovery here.
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rffrydr
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rffrydr
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| Posted: Wed May 19, 2010 9:00 am Post subject: |
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It's the economy, stupid:
Glenn Williams
EIA: Electric Power Production Up
5/19/2010 10:15 AM EDT
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Net generation in the United States rose 5.9 percent from February 2009 to February 2010. This was the third consecutive month that generation rose compared to the same calendar month in the prior year. |
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rffrydr
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| Posted: Tue May 18, 2010 12:10 pm Post subject: |
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Here's a techie making an appearance:
http://i.thestreet.com/files/tsc/v2008/photos/charts/51810rmungpic.png
| Quote: | On the daily chart, the decline off the January highs stabilized last month, and price began a channel consolidation bordered by $7.65 and $6.75. During this period, the RSI and the MacD indicators went into "bullish" divergence to price, advancing rapidly and crossing above their centerlines in the process. The histogram behind price is a representation of the weekly MacD; it is also confirming a crossover and the potential start of a positive intermediate-term trend. The Chaikin money flow is tracking above its 9-period average, recently moving above "zero," indicating accumulation. Price has advanced sharply in May, up more than 14%, taking out the 50-day moving average and penetrating the top end of the channel on an intraday basis.
The trade: Buy a close above resistance and place a percentage stop below the 50-d moving average. The pattern projects a measured move to $8.75, but a successful break from this base could generate a long-term advance. |
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rffrydr
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| Posted: Mon May 17, 2010 10:53 am Post subject: |
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Okay....it's been four painfully right years you've been wanting to pull the trigger here, Henry, and haven't. --Four years needed to put it out of the Enron/Amaranth misery by my calculations.
I've predicted that, because of the above, nat gas will not recover its place in the "financial space" --for at least a cycle or three, and there are no stratospheric gains to be made here. Chinese certainly aren't buying our gas.....yet here we are, bumping along bottom. Hurricane season is on its way in an era of whacky weather events and we have two simultaneous big news events in coal and crude respectively. Nat Gas is a political phenomenon (even though UPS just opened it's "blue line" from SoCal to Salt Lake City). Climate bill shows some interest. Export is not a factor.
Looking hard at biofuels (which are hard to play pure) but taking a position in NAT GAS now. Strategy here, you can't hurt yourself too badly falling out of first floor window. --and I can always blame Marketthoughts if I do. 
[edit] Kenworth just added a natgas version in its new line-up at same time diesel tech is getting expensive with SRC. 13/billion df equivalent according to Morningstar below. Pickens just "before his time?"
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rffrydr
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| Posted: Thu May 06, 2010 2:55 pm Post subject: |
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Glenn Williams
Natural Gas
5/6/2010 3:33 PM EDT
| Quote: | Pretty soon they will be paying us to take this off their hands:
Nymex Henry Hub Future: $3.92 Henry Hub Spot: $4.00
This kills wholesale power generators. |
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rffrydr
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| Posted: Sun Apr 25, 2010 2:52 pm Post subject: |
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Chevron doesn't like the shale price:
| Quote: | John Watson, chief executive of Chevron, is refusing to join rival international oil majors in the rush for US shale gas, warning that the “price tag is too high” to justify the investments required.
Mr Watson, who has only been in the top job at the US’s second-biggest oil company for three months, is confident his decision not to follow the pack into US shale gas is the right one. “We haven’t seen the returns,” he told the Financial Times. |
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rffrydr
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| Posted: Thu Apr 22, 2010 6:08 pm Post subject: |
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Perennial favorite on the Stockcharts popular searches.
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rffrydr
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| Posted: Wed Apr 21, 2010 10:27 am Post subject: |
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The consolidation story:
Calpine grows
Published: April 21 2010 15:09 | Last updated: April 21 2010 15:26
| Quote: | Since emerging from bankruptcy a little more than two years ago, US independent power producer Calpine has gone full circle from carrion to prey to predator. Its $1.65bn agreement to buy Pepco’s Conectiv Energy unit follows another big deal last week when Mirant and RRI Energy agreed to merge and form GenOn Energy, a company that would rival Calpine as one of America’s biggest IPPs. With the ink barely dry on Calpine’s exit from Chapter 11, fellow bankruptcy refugee NRG made an audacious bid for it before becoming a takeover target itself when its shares slumped following Lehman’s collapse.
The advantages of consolidation have only grown greater in the post-crisis landscape, which explains recent dealmaking. A sea change in US power markets caused by a glut of natural gas and looming regulation of carbon makes size and diversity appealing. Natural gas, which dictates marginal wholesale power prices, has dropped from a high of more than $13 per million British thermal units to about $4 recently, but wholesale power demand is recovering.
Power markets have become less attractive for coal-fired and nuclear generators but have also seen tighter spreads for gas-heavy companies such as Calpine. Geography, operating performance and, most of all, hedging strategies separate the relative winners from losers and Calpine has been both lucky and smart. It is a testament both to its renewed financial flexibility and desire to become more geographically balanced that it is a cash buyer. More than 60 per cent of Calpine’s generation capacity is on the west coast or in Texas and almost a quarter is in the south-east. The acquisition would bolster its position in the north-east’s PJM grid, the nation’s largest.
Size also makes continued independence more likely. It is eat or be eaten in today’s power market. |
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rffrydr
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| Posted: Fri Apr 16, 2010 7:58 am Post subject: |
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Still can't rival our cows for methane contamination.
There are across-the-board layoffs coming out of Utes this quarter. Low prices, weak demand. --The Ghost of '08. How long do we live with that $100 summer driving season carrot???
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HenryTo
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| Posted: Thu Apr 15, 2010 11:29 pm Post subject: |
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Natural Gas May Be Worse for the Planet than Coal:
http://www.technologyreview.com/blog/energy/25058/?nlid=2903
Following is the original paper on the subject:
http://www.technologyreview.com/blog/energy/files/39646/GHG.emissions.from.Marcellus.Shale.April12010%20draft.pdf
| Quote: | | The comparison with coal is difficult, as the energy needs and greenhouse gas emissions from ining and transporting the coal are not well known. As a first cut, it may make sense to assume that these are roughly equal to those for obtaining shale gas. Some methane leakage also occurs when mining coal, but the amount varies greatly with the type and location of the coal and the mining technology used. A preliminary assessment suggests methane leakage is less than for natural gas. If so, total emissions from coal are probably quite similar to those for natural gas obtained from shale formations such as the Marcellus Shale. |
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rffrydr
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| Posted: Tue Apr 13, 2010 3:05 pm Post subject: |
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Glenn Williams
EIA Natural Gas Consumption for 2008
4/13/2010 3:33 PM EDT
| Quote: | Today EIA released estimates of natural gas consumption, prices, and expenditures for 2008. Highlights include:
"In 2008, the United States consumed 23 trillion cubic feet of natural gas, equivalent to 24 quadrillion British thermal unit (Btu) of heat energy. Thirty-four percent of natural gas consumption was for industrial use, and 29 percent was used for power generation. The top three consuming States were Texas (15%), California (11%), and Louisiana (6%)."
"U.S. total expenditures on natural gas amounted to $230 billion in 2008, a 17% increase over 2007. The residential sector alone spent $67 billion, 29% of total natural gas expenditures in the United States." |
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