Jack Yetiv

Natural Gas, And Lots of It

I've now been reading for months about how storage is going to fill up causing gas to be "dumped" on the market, but the math does not add up. Experts are projecting an injection of 50-60 BCF to be reported this Thurs, Oct. 1, which should put total amt of gas stored at 3.6 TCF. I have read we have somewhere between 3.8 and 4.0 TCF of storage capacity, with the best number, I believe, being the midpoint, 3.9 TCF. That means we can store 300 BCF more before storage is full (yes, I realize different storage locations may have differential fills, but I am talking across the US).

If we continue storing an average of 55 BCF per week, on Oct. 29, we should be at about 3.8 TCF--just approaching full on the 3.8 TCF storage capacity number, and a bit under full if you believe the 3.9 TCF number, and even more under if you believe 4.0 TCF of storage capacity.

Usually withdrawal from storage starts in the beginning of Nov. Therefore, unless I'm missing something, there won't be many days (if any) of "dumping" before withdrawal from storage begins.

Jack Yetiv

Oil and Natural Gas Due for a Pullback?

Some people think of oil like all other commodities that are subject to bubbles--and then subject to "crashing"--eg, overbought housing.

But oil is different. Its price can be TOTALLY controlled by OPEC. If Saudi Arabia decided it wanted oil to go to $150 tomorrow and never go back, it could achieve that. How many millions of decreased production from Saudi Arabia would it take to spike oil to $150 tomorrow? 2 million barrells? 5? 8? I don't know, but my guess is 2-3 million barrell cutback by Saudi Arabia would do it.

In my article a few months ago, I believed that OPEC would not want to kill the golden goose and that they would open up the spigots if oil; got to $120. That does not seem to be the case.

If our demand decreases and nobody else took up the slack (which they would), OPEC could easily lower production to generate whatever price they wanted, up to $150, and maybe even more.

Jack