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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 |
HenryTo
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| Posted: Fri Dec 04, 2009 11:31 pm Post subject: |
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Bill, thanks for the update on nat gas technicals.
Or you could do some sentiment analysis, and keep track of how various traders are positioned (hard to do so unless you're trading natural gas professionally).
Mainstream sentiment now turning bearish:
http://blogs.chron.com/newswatchenergy/archives/2009/12/more_signs_of_t.html
However, I'm still waiting for that additional 30% to 50% decline in UNG. Bill are you getting any snow in your area? |
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nodoodahs
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| Posted: Fri Dec 04, 2009 11:04 pm Post subject: |
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| HenryTo wrote: | Not betting on it until UNG declines another 30% to 50%.
Qatar's LNG is break-even at $3/MMBtu and shale gas would probably get cheaper under the current scenario (despite the lack of new drilling, gas supply is still holding up). I would also not bet on it until the contango and the seasonal spreads collapse. |
MACD (16,26,9) would have kept a swing trader on the right side of both the continuous contract and the UNG (which actually seems to do a darn fine job of mimicking the continuous long hold of the near contract with roll loss).
For that matter, 21 and 63 day moving averages would have kept a position trader on the right side of this thing for most of its (UNG's) history.
If you had enough money to really diversify, you could play all the commodes profitably based only on roll yield and loss.
Or, you could do a lot of fundamental analysis on natural gas. 
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rffrydr
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rffrydr
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| Posted: Tue Dec 01, 2009 1:59 pm Post subject: |
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Best to view the shale as a manufacturing process, I think.
It's high irony that the shipping glut has turned into contango's savior and more high finance. LNG is of course specialized but that shipping too was overproduced to Europe's Gazprom problems. Gas is Qatar's game and whether in jets or ships or pipeline will continue to produce below breakeven just to keep that infrastructure flow.
Still a question why some prominence hasn't been given in a badly needed energy policy right here "at home."
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HenryTo
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| Posted: Tue Dec 01, 2009 12:54 am Post subject: |
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Not betting on it until UNG declines another 30% to 50%.
Qatar's LNG is break-even at $3/MMBtu and shale gas would probably get cheaper under the current scenario (despite the lack of new drilling, gas supply is still holding up). I would also not bet on it until the contango and the seasonal spreads collapse. |
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rffrydr
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| Posted: Mon Nov 30, 2009 7:02 am Post subject: |
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Bloomberg "heralding" the arrival of Qatar's LNG with much talk of inventory overhang:
http://www.bloomberg.com/apps/news?pid=20601109&sid=agwUppniRIgE&pos=14
Geology and technology still do not favor these low low prices. Mital expanding, India rocking....utilities only now kicking in with Greenspan's vision (if not Picken's) of a gasified world.
Not betting on it but there's room on the upside.
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rffrydr
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rffrydr
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HenryTo
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| Posted: Sat Nov 07, 2009 1:18 am Post subject: |
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Natural gas supply still very high. At the same time, the number of natural gas drilling rigs increased by 6 to 734 this past week:
| Quote: | U.S. natural gas rig count climbs 6 to 734 for week
Fri Nov 6, 2009 1:38pm EST
NEW YORK, Nov 6 (Reuters) - The number of rigs drilling for natural gas in the United States climbed by six this week to 734, according to a report on Friday by oil services firm Baker Hughes in Houston.
The U.S. natural gas drilling rig count has gained in 14 of the last 16 weeks after bottoming at 665 on July 17, its lowest level since May 3, 2002, when there were 640 gas rigs operating.
But the rig count is still down sharply since peaking above 1,600 in September of last year, standing at 805 rigs, or 52 percent, below the same week in 2008.
Many gas producers have scaled back drilling operations with credit still tight and natural gas prices around $4 per million British thermal units (mmBtu), off about 70 percent from July 2008 highs above $13.
But while drilling has dropped sharply over the past year, traders noted production has not slowed much, with government data last week showing gross August gas output in the lower 48 states climbed 0.8 percent from July and stood at about 0.4 percent above year-earlier levels.
Most traders agreed more rig cuts may be necessary to offset record high inventories and steep recession-related cuts in demand, particularly in the industrial sector. |
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HenryTo
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| Posted: Thu Nov 05, 2009 10:10 am Post subject: |
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Latest natural gas storage report - this is probably the last net injection for 2009:
http://www.eia.doe.gov/oil_gas/natural_gas/ngs/ngs.html
| Quote: | | Working gas in storage was 3,788 Bcf as of Friday, October 30, 2009, according to EIA estimates. This represents a net increase of 29 Bcf from the previous week. Stocks were 379 Bcf higher than last year at this time and 414 Bcf above the 5-year average of 3,374 Bcf. In the East Region, stocks were 123 Bcf above the 5-year average following net injections of 27 Bcf. Stocks in the Producing Region were 227 Bcf above the 5-year average of 962 Bcf after a net injection of 1 Bcf. Stocks in the West Region were 64 Bcf above the 5-year average after a net addition of 1 Bcf. At 3,788 Bcf, total working gas is above the 5-year historical range. |
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HenryTo
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| Posted: Thu Oct 29, 2009 8:34 am Post subject: |
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Latest natural gas storage report. Producing Region adds 1 Bcf of storage:
http://www.eia.doe.gov/oil_gas/natural_gas/ngs/ngs.html
| Quote: | | Working gas in storage was 3,759 Bcf as of Friday, October 23, 2009, according to EIA estimates. This represents a net increase of 25 Bcf from the previous week. Stocks were 373 Bcf higher than last year at this time and 414 Bcf above the 5-year average of 3,345 Bcf. In the East Region, stocks were 109 Bcf above the 5-year average following net injections of 17 Bcf. Stocks in the Producing Region were 237 Bcf above the 5-year average of 951 Bcf after a net injection of 1 Bcf. Stocks in the West Region were 67 Bcf above the 5-year average after a net addition of 7 Bcf. At 3,759 Bcf, total working gas is above the 5-year historical range. |
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rffrydr
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| Posted: Tue Oct 27, 2009 3:44 pm Post subject: |
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Utilization rates at X are 54%: last year this single company accounted for almost 1.5 % of open NatGas contracts.
Sees signs of pickup on automotive recovery.
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rffrydr
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| Posted: Tue Oct 27, 2009 3:08 pm Post subject: |
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Jobs are job 1? The Madman sees a possible constituency:
Maybe President Obama can make the transition to natural gas that Ed Rendell just did in Pennsylvania. The transition is a simple one: Focus on jobs and many things go well; don't focus on jobs and you aren't focused on anything.
When I first heard of the Marcellus Shale from Aubrey McClendon of Chesapeake (CHK - commentary - Trade Now), I was pretty much in disbelief. How could there be so much natural gas in some place in western Pennsylvania? Too good to be true.
That was just a few years ago. I devoured everything I could read about the Marcellus Shale and quickly asked the governor to come on the show. I had known him for years, had helped raise money for him and thought this natural gas patch might be the thing he needed to get people in his state hiring again in good jobs.
Initially, he didn't seem all that interested. In fact, I dealt more with his environmental preservation people than him, as there were initial thoughts that too much water was being used and too many roads broken down.
All of that has now been dealt with and this weekend Rendell actually made sure that the industry wasn't taxed for bringing nat gas out of the ground, setting the stage for a drilling boom and pipeline laying -- the infrastructure for this is much better in Louisiana and Texas than Pennsylvania so both the drilling rigs and the pipelines have to be moved and created.
Rendell's pretty confident that as many as 200,000 jobs will be created over the next few years and that nat gas will be used as a bridge fuel. He also believes that if the federal government mandates that its own fleets be natural gas-capable, we will have gone a long way toward switching to this fuel.
Was he helped by lobbyists like Murry Gerber, the CEO of EQT (EQT - commentary - Trade Now), the largest natural gas company in Pennsylvania?
No. While he took money from them, I think he saw an opportunity to get the drilling companies to come to Pennsylvania over New York, which already has made life hell for them over environmental concerns, and over West Virginia, which does tax the stuff.
The big news for the country on this is that Rendell, while from the Hillary wing, is a commonsensical, middle-of-the-road Democrat who wants to take a leadership position on these matters.
If he does, then the president -- who is in the solar/wind/clean coal wing of the party -- might see the light on the issue.
That means that natural gas gets a floor with the ceiling provided by the glut of nat gas that will become equilibrium if the Rendell scenario plays out.
That's good for everyone
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HenryTo
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| Posted: Fri Oct 16, 2009 12:02 am Post subject: |
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A nicely written summary and history of the natural gas industry:
http://www.technologyreview.com/energy/23694/page1/
| Quote: | From a technology perspective, natural gas and renewable sources, such as wind and solar, could complement each other. Natural-gas-fired turbines could be used to generate electricity when the wind isn't blowing or the sun isn't shining. But the economic and political relationship between natural gas and renewables is more complicated. If federal and state policies continue to mandate that power producers use more renewables, the electricity industry is likely to concentrate its new capacity on those technologies while keeping its low-cost coal-fired power plants. Policy will drive the use of renewables, and economics will drive the use of coal. Natural-gas plants will be squeezed out.
Then again, a focus on natural gas as a way to trim carbon dioxide emissions could divert attention--and money--from the need for zero-carbon technologies. "I am a big fan of clean natural gas, but there is a very big danger of getting everybody revved up about gas and losing sight of the fundamental technological transformation that is needed," says Victor.
The availability of vast natural-gas resources in the Marcellus shale and similar sediments around the United States has changed energy calculations in a fundamental way. The discovery of this large and seemingly economical new source of fossil fuel has surprised even geologists who have spent their careers studying the shale. Little wonder, then, that policy makers and politicians are just beginning to try to figure out what the discoveries mean.
It's not clear how--or even whether--those responsible for energy policy will take advantage of the opportunity. At best, the newly identified supplies of gas will buy time, providing a chance to reduce greenhouse gases while more innovative technologies are developed and deployed. At worst, the country will burn through large volumes of this fuel only to find that we haven't reduced carbon dioxide emissions very much--and that we've put off investing in research to create cleaner technologies. |
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HenryTo
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| Posted: Thu Oct 15, 2009 8:39 am Post subject: |
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Latest natural gas storage numbers:
http://www.eia.doe.gov/oil_gas/natural_gas/ngs/ngs.html
| Quote: | | Working gas in storage was 3,716 Bcf as of Friday, October 9, 2009, according to EIA estimates. This represents a net increase of 58 Bcf from the previous week. Stocks were 450 Bcf higher than last year at this time and 474 Bcf above the 5-year average of 3,242 Bcf. In the East Region, stocks were 138 Bcf above the 5-year average following net injections of 38 Bcf. Stocks in the Producing Region were 266 Bcf above the 5-year average of 916 Bcf after a net injection of 13 Bcf. Stocks in the West Region were 69 Bcf above the 5-year average after a net addition of 7 Bcf. At 3,716 Bcf, total working gas is above the 5-year historical range. |
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