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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Odysseus · Posted: Wed Dec 24, 2008 9:55 pm Post subject:

My Ruskies have already locked up most if not all of the Caspian gas. My guess is that they will begin building pipelines to the Indian/SE Asian market.

Europe Ukraine etc may be forced into long term take or pay contracts at much higher prices.

Slyly, the Russian Government is now re-nationalizing much of Russian industry that was stolen er... privitized under Yeltsin. Maybe 3 years and the oligarchs will be living in Paraguay next door to the Bushes. I hope they garden.
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HenryTo · Posted: Wed Dec 24, 2008 10:09 am Post subject:

The "gas cartel" meets in Moscow:

http://www.ft.com/cms/s/0/e11a283a-d0f1-11dd-8cc3-000077b07658.html

rffrydr · Posted: Sun Sep 28, 2008 9:40 am Post subject:

Tax-exempt structures will no longer back this infrastructure:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aXTyfy3qIoAg&refer=home

LEH bonds a "buy" monday?
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HenryTo · Posted: Fri May 30, 2008 8:34 am Post subject:

Says natural gas supply is plenty but that prices should be higher in a few years anyway. Note that Japan is now buying gas (LNG) at a price of over $20/MMBtu.

http://www.marketwatch.com/news/story/underestimating-natural-gas-value-summer/story.aspx?guid=EC4C892C-536A-4679-B47B-AB6A928B228E&dist=spc2_mr

HenryTo · Posted: Thu May 29, 2008 5:24 am Post subject:

LNG imports non-existant - not surprising given that current spot prices at the Henry Hub are about half of what Japan is paying (LNG prices in Japan are tied to crude oil prices):

http://www.nytimes.com/2008/05/29/business/29gas.html?_r=2&adxnnl=1&oref=slogin&ref=business&adxnnlx=1212059573-PQL58DmWzoPcMPAYTsLusw

HenryTo · Posted: Sun May 25, 2008 11:58 am Post subject:

An article on LNG Japanese spot prices - which is doubled what we are currently paying:

http://thefacts.com/story.lasso?ewcd=ce1bb8104d017b33

Also note that from 2003 to 2005, Japanese LNG prces were actually lower than prices at the Henry Hub in Louisiana:

http://www.investis.com/bp_acc_ia/stat_review_05/htdocs/reports/report_21.html

rffrydr · Posted: Wed May 07, 2008 3:33 pm Post subject:

Cost of making a nickel last year 10cents--now, 7cents.

Cost of making a penny last year 2cents--now 1.26cents.
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Today is the Tomorrow you worried about Yesterday!

rffrydr · Posted: Wed May 07, 2008 3:31 pm Post subject:

HenryTo · Posted: Wed May 07, 2008 11:33 am Post subject:

Goldman on natural gas:
----------------------------------------------------------------------------------
Winter Natural Gas Crunch Possible?
Wednesday May 7, 11:19 am ET

U.S. natural gas inventories could be at seriously low levels at the start of winter this year, if current rates of liquefied natural gas (LNG) imports remain at record lows, a Goldman Sachs report said Wednesday.

The year is already two months into the summer re-fill season when producers traditionally stock up on cheap gas volumes to sell on more profitably in winter, but so far storage facilities have gone unused as prices remain high.

More so, ongoing weakness in US natural gas prices compared with prices in the rest of the world is providing no incentive for LNG cargoes to be directed to the US, leaving imports at record-low levels.

"The US still needs to increase LNG imports and incentivize some fuel switching away from natural gas towards residual fuel oil to bring nat gas inventories to full levels by end of October," the report said.

To achieve higher imports the bank says Nymex natural gas futures futures, currently trading at 28-month highs of more than $11.10 per million British thermal units, will need to rise further to close the gap with international gas prices and the rest of the oil complex in coming months.

If prices fail to rise, it will be hard for U.S. natural gas inventories to reach full levels by the end of the summer, the report said. And U.S. supply could come under pressure if this winter is as severe as 2007, the coldest in 7 years.

Goldman raised its US domestic production outlook for the year by 300 million cubic feet per day, but adds any increase will be offset by an increase in expected U.S. pipeline exports, keeping the supply balance tight.

rffrydr · Posted: Wed Apr 16, 2008 6:28 am Post subject:

...But it's finally joined the parade:

http://www.thestreet.com/tsc/common/images/storyimages/natgas_0415_big.gif
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Today is the Tomorrow you worried about Yesterday!

HenryTo · Posted: Tue Mar 25, 2008 10:52 am Post subject:

I am still not buying natural gas here. If you have the ability to do spreads across different pricing points in the US (such as Transco Zone 6 - actually, there is a basis contract for this on the NYMEX) then by all means go ahead, but given that the NYMEX contract is priced at the Henry Hub, I would stay away for now:

http://www.chron.com/disp/story.mpl/headline/biz/5645473.html

rffrydr · Posted: Sun Dec 16, 2007 8:53 pm Post subject:

I'm going to go out on limb and say no rally in gas until crude sells off.
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Today is the Tomorrow you worried about Yesterday!

HenryTo · Posted: Sun Dec 16, 2007 8:48 pm Post subject:

NE gets pumelled by a snowstorm and natural gas is actually down 5 cents in overnight trading:

http://futuresource.quote.com/quotes/quotes.jsp?s=NG

HenryTo · Posted: Tue Aug 28, 2007 8:32 pm Post subject:

Most probably still more liquidation in natural gas coming from the Bank of Montreal before we can call this a bottom:

http://www.bloomberg.com/apps/news?pid=20601087&sid=axZrYrr5VhOw&refer=home

HenryTo · Posted: Tue Aug 28, 2007 9:26 am Post subject:

Natural gas actually up 3.5 cents today, but this was after a 2% drubbing yesterday:

http://futuresource.quote.com/quotes/quotes.jsp?s=NG

Will continue to keep an eye on this going forward but we're still definitely not at a "load up the truck" point yet.