Dian L. Chu

China: Consequences of the Sleeping Lion Awakened

Just to clarify, Seeking Alpha editors changed my title. My original post title was "China - The Sleeping Lion Awakened". You will find it posted on Zero Hedge with the original title.

The quote describing China was originally by Napoleon (of France). There are two translated versions: Sleeping Giant and Sleeping Lion. We Chinese typically refer to the "Sleeping Lion" metaphor as lion is often referenced on our literature and architecture as well.

On Nov 16 09:23 AM Tony Petroski wrote:

> The title said "Consequences of the Sleeping Lion Awakened."
>
> I missed reading anything about that. Instead I read an article touting
> the mightiness of China and the Chinese economy.
>
> Note to the communist handlers: In english the phrase is "sleeping
> giant."

Deja Vu 2008: Crude Oil Market Entirely Detached from Fundamentals

GLA??? ?
Do you mean Greenlight Advisor??
Yes, I guest post there via Mr. Prieur du Plessis, a noted money manager and SA author as well. This article happens to be one of them.
I contribute regularly to 4 sites including SA, and through content distribution, you will find my articles in lots of different sites. Regardless, "sources of my articles" are from myself and my blog.
As you can see, author credit and link back to my blog are clearly at the top of the article on Greenlightadvisor.com.
greenlightadvisor.com/.../
Thanks for your readership.


On Oct 19 03:37 PM knight wrote:

> You should be quoting the source of your articles as this came directly
> from GLA.

Flattening Oil Contango: Is It a Bullish Sign?

Natgas tends to be more regional whereas crude oil is more global. For this reason, natgas and oil have very different market fundamentals. Please have a look at my previous article "Oil and Natural Gas: Ratio Explodes in 2009" and a couple of natgas artiles since that, you will see my view on the natgas.
The next 2 years could be tough for natgas, but price should rebound from the current historical lows, as production cuts materialze on a larger scale and expected demand pick up. Thanks for your comment.


On Sep 24 09:48 AM scudman wrote:

> hey dian, if your theory is correct--when or how might this begin
> to lift natural gas as well--they've not been linked for many moons
> -- do you see the two marching in step anytime soon?

Flattening Oil Contango: Is It a Bullish Sign?

Historically, oil as well as other commodites and bonds tend to trend inversely to the stock markets. However, all markets across the board are going up this year mainly due to the unprecedented global QE and weakening dollar. As you know, most commodities, including oil, are priced in U.S. dollar. So this current rally across all sectors is not driven by fundamentals.
As stated in the "Goldilocks of Oil Prices" section of my article, the $60 to 75 oil price range seems to be the "happy zone" for everyone from consumers to producers, and where OPEC will most likely defend. Therefore, I see this range sustainable in the medium term amid expectations of weakening dollar, economic recovery, and OPEC defense, among other factors.
Fossil fuels are projected to still supply 70-80% of world energy needs well into the foreseeable future by various studies even if alternative energy use got trippled or more. Until alternative energy becomes economically competitve and gain wide consumer acceptance to really take significant market share from conventional sources, we will need all kinds of energy sources alternative and conventionals. Thanks for your comment.


On Sep 24 09:30 AM change is the only constant wrote:

> Thanks Dian. I am not sure if this was your intent, but you have
> just defined how oil can continue to spur or cap growth based on
> volitility. And you have also outlined how speculative money will
> move energy trading in the near term.
>
> If oil is able to drop in price to $40 without any help, large segments
> of the alternative energy strategy may get crushed by the who cares
> faction, that will put off non-economic concerns until tomorrow.
> If the oil price spikes are few and far enough in between going forward,
> oil's price volitility, again, becomes a barrier to entry for alternatives
> (and drilling). The producers' nations wanting $60 to $70 without
> any leverage doesn't mean it will happen. And consumers wanting cheap
> and stable energy will not be willing to pay to allow a real oil
> alternative to build enough foundation to stand on its own. Thereby,
> if and when oil gets $40 cheap, unless growth rebounds quickly, the
> price stays there for a while.
>
> Speculators in alternative energy will grow tired of waiting for
> oil to peak....again.....and slowly money will move back into oil
> speculation, which..... guess what...... raises oil's price....and...creates
> a boom in alternatives. This is a glacier pace speculative cycle
> that affects many other investment endeavors.
>
> So if oil staying between $60 to $90 allows alternatives to gain
> a significant foothold, oil will have had a cap and floor put on
> its price. Then all growth and commodity inflation will be muted
> for a long, long time. Hmmmm......We are in Soros territory.

Flattening Oil Contango: Is It a Bullish Sign?

Please review the "Goldilocks of Oil Prices" section of my article. $60-75 could be sustained due to expectations of weakening dollar, global economic & demand recovery, and OPEC defending this price level, among other factors. As stated, $60-75 seems to be the price range everyone can live with. Thanks for your comment.


On Sep 24 09:04 AM GrantQ wrote:

> Sorry if i'm missing something obvious here, but if market fundamentals
> say $40, but you still expect $60-$75, how are you accounting for
> the difference?
>
> If $60+ is going to last for another 3 years, how is that NOT driven
> by fundamentals?

Flattening Oil Contango: Is It a Bullish Sign?

Please refer to Fig. 3 (click to enlarge) in my article, which is a world liquid fuel consumption actual and forecast to 2010 by the U. S. EIA. The forecast pattern is in line with others such as the IEA, etc.
As you can see, the pick up from China will likely be offset by the decline in develped countries, so the growth is not as robust as it was before this global recession. Since oil is currently overpriced, in my opinion, the overall growth along with other market factors could still contiue to support the $60-75 level.
Thanks for your comment.


On Sep 24 07:25 AM chap08 wrote:

> You say that "the demand outlook remains dismal" and then go on to
> prove this by listing US domestic figures. Is such a US-centric view
> of oil still valid? Asia on its own consumes more oil than the US,
> and that's where we can expect most of the future demand to come
> from.

Natural Gas Trading: Right Now, It's the Wild, Wild West

The answer and as concluded in my article: You Don't.
In order to move the natty in any direction, you will almost need to be a fairly big player, i.e., institutions or hedge funds. Since both the natgas market and UNG are short and volatile, it is hard to time and predict. While some pro traders might get lucky, most will get beat up.

On Sep 19 11:52 AM Genesis wrote:

> So... if the shorts are trying to take advantage of the UNG rollover,
> and the short squeezers are taking advantage of the massive short
> positions, how do we take advantage of the traders who are taking
> advantage of the ones who are taking advantage of the UNG rollover?
> ;)

Natural Gas Trading: Right Now, It's the Wild, Wild West

Below was excerpted from the US EIA Sep report www.eia.doe.gov/emeu/s...
"Industrial natgas consumption declined by 12% YoY in the first 6 months of 2009. EIA expects natural gas consumption will increase slightly in the commercial and industrial sectors in 2010 due to improved economic conditions and low prices. The anticipated addition of new coal-fired generating capacity and rising natural gas prices limits the potential for significant increases beyond the forecast 2009 level in natural gas consumption by electric generators."
So, the increase is not expected to give too significant boost to the slumping demand. However, this could change depending on the economic recovery pace.
Thanks for your comment.

On Sep 18 04:52 AM Aricool wrote:

> I have a question about the (slightly) lower than expected injections
> the past few weeks. You mention (and I've read elsewhere) it is b/c
> of OFO; however, how we be sure that it is not also due to an up
> tick in industrial demand since it coincides with a higher PMI and
> (artificial) upticks in auto and aluminum production (very NG intensive),
> or switching from coal to NG, or LNG being diverted away from the
> US when NG is < $3, etc., etc.
>
> Do you have any thoughts on this?
>
> thanks again,
> Ari

Natural Gas Has Spiked 60% Since Labor Day. Why?

Please note that this is $UNG rollover week, and $UNG has reportedly just become an active buyer of fresh futures again, which probably has to do with the planned new shares issuance the end of this month.
This at least is one of the major contributors to the 16% natgas gain in the past 2 days. Nothing has really changed from a market fundamental perspective regarding storage, demand & supply.

ftalphaville.ft.com/bl.../
ftalphaville.ft.com/bl.../

Natural Gas Has Spiked 60% Since Labor Day. Why?

Thank you and good luck to you guys as well.


On Sep 14 10:45 PM JuniorEnergyFund wrote:

> Dian,
>
> Thank you for a very timely article. I was in Houston this morning
> asking our bank to open us a line of credit. If we see “under $2”,
> or better yet the 1998 low of $1.78, we are going to borrow money
> for the first time in our history to get “leveraged long”.
>
> Not to fond of ETF’s. Too many contango problems! We’ll probably
> use the money to buy weak/bankrupt reserves. At under $2 there will
> be plenty to choose from.
>
> However you play it, good luck! And, thanks again for a great article.

Natural Gas Has Spiked 60% Since Labor Day. Why?

Thanks you as well.

On Sep 15 11:53 AM fanning wrote:

> It is informative articles and comments, Thanks.

Natural Gas Has Spiked 60% Since Labor Day. Why?

Thank you. Please do visit often.


On Sep 15 12:41 PM Dryspell wrote:

> Dian,
>
> Excellent article. Thank you.

Natural Gas Has Spiked 60% Since Labor Day. Why?

I'm long term bullish on natgas as well. It's just that the next couple years could be tough. Thanks for your comment.


On Sep 14 06:21 PM Ricard wrote:

> It amazes me how natural gas can spike like this and yet UNG still
> shows smooth sailing to oblivion. No other plays seem to correlate
> either.
>
> Thanks Ms. Chu for continually updating investors like myself on
> this situation. Unfortunately, I've yet to conclude that there is
> anything that will correlate to what I see as a wonderful long term
> opportunity in NG. Most 'pure play' E&amp;P stocks seem to have already
> priced in a long term bullish scenario, despite the low NG prices.

Natural Gas Has Spiked 60% Since Labor Day. Why?

There is typically more than one side of any story. I presented my view via this article for people to ponder upon.
Thanks for your comment. Hope to see you here often.


On Sep 14 04:21 PM ETETET wrote:

> Dian, Thanks for the contrarian view.

Natural Gas Has Spiked 60% Since Labor Day. Why?

Thanks. Please be sure to visit SA and my future articles often.


On Sep 14 01:21 PM Nikhil wrote:

> Great article, objectively looks at the market and avoids emotional
> analysis which so many people tend to do , due to their positions.