Seeking Alpha

Sir. Monaco's  Instablog

Sir. Monaco
Send Message
  • OH, THE ENORMITY!!! - “U.S. Resources Of Natural Gas Could Last For Nearly A Century” 35 comments
    Apr 9, 2013 7:56 PM | about stocks: APC, BBG, BP, BTU, CHK, COG, COP, DVN, ECA, ELP, EQT, FST, GS, JPM, KWK, LNG, NFX, QEP, RRC, SPY, SRE, SWN, UNG, UPL, WPX, XCO, XEC, XOM

    "U.S. resources of natural gas could last for nearly a century"

    (click to enlarge)

    A recent Bloomberg article discusses the recent enormities of natural gas supplies, saying

    "The U.S. has 2,384 trillion cubic feet of recoverable natural gas according to an industry estimate, twice what a similar study concluded nine years ago"

    With this, the article states "U.S. resources of natural gas could last for nearly a century"

    Based on this, and the current bubble in natural gas prices, we will see $3.00 natural gas prices very soon. As I have written about those who are in a long position are about to get crushed, as there are so many indisputable factors for prices going lower:

    1. at the height of winter natural gas prices were at $3.00

    2. only 45 days ago natural gas prices were $3.00

    3. the enormity of natural gas supply squashes any argument against lower prices

    4. drilling tech9onology has followed the law of advancement and efficiencies are everywhere

    5. spring time is in full bloom and no demand is needed at this time

    6. long money managers got themselves in a pinch on this one and getting out of it will result in Amaranth-like losses for some

    7. actual deliveries at months end for all open interest contracts has decreased month-over-month, while open interest on the long-side has increased

    We hope you enjoy reading the Bloomberg article as we have, along with understanding these seven points.

    Our prices targets over the next 1-2 weeks for natural gas are $3.30-$3.50, with prices going lower in the weeks to follow.

    Cheers,

    References:

    "Natural Gas Resources Seen at Record in U.S. on Fracking"

    By Mark Drajem - Apr 9, 2013 11:05 AM PT

    http://www.bloomberg.com/news/2013-04-09/natural-gas-resources-seen-at-record-in-u-s-on-fracking.html

    www.bloomberg.com/news/2013-04-09/natura....html

    Disclosure: I am short UNG.

    Additional disclosure: Short natural gas.

    Themes: Natural Gas Stocks: APC, BBG, BP, BTU, CHK, COG, COP, DVN, ECA, ELP, EQT, FST, GS, JPM, KWK, LNG, NFX, QEP, RRC, SPY, SRE, SWN, UNG, UPL, WPX, XCO, XEC, XOM
Back To Sir. Monaco's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (35)
Track new comments
  • GJN
    , contributor
    Comments (52) | Send Message
     
    WOW!! Just a brief comment: The Bloomberg reference link did not open for me. Please check the link you inserted. Thanks!
    10 Apr 2013, 12:33 AM Reply Like
  • GJN
    , contributor
    Comments (52) | Send Message
     
    OK - - just found the article here: Thanks again. http://bloom.bg/YbYtne
    10 Apr 2013, 12:41 AM Reply Like
  • Sir. Monaco
    , contributor
    Comments (367) | Send Message
     
    Author’s reply » Thank you GJN...my apologies on the link.
    10 Apr 2013, 12:53 AM Reply Like
  • rajiv ahuja
    , contributor
    Comments (5) | Send Message
     
    sir you have given down side targeyt of 3.2 to 3.5 what is the possible upside target ?
    16 Apr 2013, 04:30 AM Reply Like
  • Sir. Monaco
    , contributor
    Comments (367) | Send Message
     
    Author’s reply » your questions assumes we see upside, - sorry, not the case.
    16 Apr 2013, 11:57 AM Reply Like
  • rajiv ahuja
    , contributor
    Comments (5) | Send Message
     
    thanks sir
    16 Apr 2013, 06:38 PM Reply Like
  • GJN
    , contributor
    Comments (52) | Send Message
     
    Sir should now issue different apology: "Sorry, yes it was the case - NG jumped up again to 4.429 today"
    18 Apr 2013, 03:47 PM Reply Like
  • Sir. Monaco
    , contributor
    Comments (367) | Send Message
     
    Author’s reply » just keep in mind that GJN works for GS....take that into account when he says anything....

     

    oh, sorry blow your cover GJN.....my bad
    18 Apr 2013, 05:55 PM Reply Like
  • packetbrain
    , contributor
    Comments (3) | Send Message
     
    Link here...

     

    http://bloom.bg/YbYtne
    10 Apr 2013, 09:10 AM Reply Like
  • Bobby Soxer
    , contributor
    Comments (9) | Send Message
     
    Today's weather-related rally hurts BUT I bring good news.
    Been getting some really good info on the weekly inventory report and with the market expectation for a 21bcf draw, we could see a significantly lower number for a nice bearish surprise.
    10 Apr 2013, 04:55 PM Reply Like
  • Bobby Soxer
    , contributor
    Comments (9) | Send Message
     
    Number comes in @ 14, a full 7bcf lower than expectations and it still isn't good enough to tank this market. Very frustrating.
    11 Apr 2013, 10:51 AM Reply Like
  • Sir. Monaco
    , contributor
    Comments (367) | Send Message
     
    Author’s reply » is what it is,.... things are changing and once people get over this hypermania portfolio managers/hedge funds will be heading towards the exits,
    11 Apr 2013, 10:54 AM Reply Like
  • GJN
    , contributor
    Comments (52) | Send Message
     
    Hello again Sir. I think your statement made prior to today's report that your price target for NG "over the next 1-2 weeks are $3.30-$3.50, with prices going lower in the weeks to follow," was based on your expectation of large net injections over the next 1-2 weeks. So far, the large net injections haven't materialized. Are you now reevaluating your data sources and considering revising your NG price projections?? TY.
    11 Apr 2013, 11:27 AM Reply Like
  • Sir. Monaco
    , contributor
    Comments (367) | Send Message
     
    Author’s reply » no. not at all. it might be pushed back a week or two, but in the end we get there.
    11 Apr 2013, 12:26 PM Reply Like
  • GJN
    , contributor
    Comments (52) | Send Message
     
    It seems we aren't seeing the large injections from producers?? If there is a floodgate of injections just waiting to enter, why aren't we seeing the results in the weekly report?? Once again, the NG longs prevail and many are calling for higher prices ahead.
    11 Apr 2013, 03:59 PM Reply Like
  • Sir. Monaco
    , contributor
    Comments (367) | Send Message
     
    Author’s reply » GJN, I would guess you work for GS given you created an account and started following me the moment I wrote an article about their call (as did 5 others from the GS squad).

     

    But to fill you in on something, going from -92 to -14 is just fine for this weeks release. For you to call conclusions about injections rates right now is both naïve and premature.

     

    Get back to me in late May and maybe we will have something to discuss,
    11 Apr 2013, 04:10 PM Reply Like
  • GJN
    , contributor
    Comments (52) | Send Message
     
    Sir - - I do not work for GS, as you wrongly assumed. I am merely presenting legitimate questions to you after you released your article calling for a floodgate of injections starting this week and a huge price drop as well. Where are the huge injections you predicted?? I truly hope you are correct in your calculations - but thus far there is no evidence of large injections in NG and I think you may have miscalled the market (perhaps prematurely). As I stated, I hope you're right, but given this week's draw data, there is no evidence of large injections and your call needs to be questioned at this time??
    11 Apr 2013, 05:35 PM Reply Like
  • Bobby Soxer
    , contributor
    Comments (9) | Send Message
     
    Today's report was never expected to see an injection.
    We should see the first of the year in next week's report.
    11 Apr 2013, 06:49 PM Reply Like
  • GJN
    , contributor
    Comments (52) | Send Message
     
    I am calling attention to the author's statement made on 4/9/13 in this article "Our prices targets over the next 1-2 weeks for natural gas are $3.30-$3.50, with prices going lower in the weeks to follow." In another recent article by the same author, it was stated that suppliers are currently chomping at the bit to bring NG into market. If NG will drop to 3.30 - 3.50 within the next 2 weeks - - a floodgate of injections was assumed. I ask again - where is the floodgate? Do you also expect a flood of injections next week that will drop the NG price to 3.30 - 3.50, as the author stated?
    11 Apr 2013, 08:28 PM Reply Like
  • Sir. Monaco
    , contributor
    Comments (367) | Send Message
     
    Author’s reply » wow! - I did not "assume" when I "guessed" you're with GS, and now I think you're the guy responsible for the latest GS call (or perhaps last year's).

     

    I will never know,.....oh, well, but it sure would be interesting if I was correct in this guess, which I believe to be so.

     

    - -

     

    regarding your latest comments, today is 4/11 and you accurately quote me from 4/9, - give it some time buddy,

     

    I can feel the frustration coming through in your words, if my guess is correct, hope they don't come down on you too hard.
    11 Apr 2013, 09:38 PM Reply Like
  • GJN
    , contributor
    Comments (52) | Send Message
     
    LOL - - trust me - - I'm not with GS. And who are you with Sir Monaco?? You want some more time. Ok, how about 2 weeks per your own statement. Apparently, you're still holding to your call for NG to drop to 3.30 - 3.50 within 2 weeks? I don't see the NG injection floodgates in the weekly report so far. We will see what happens next week. In the meantime, stay thirsty my friend ;=))
    11 Apr 2013, 10:24 PM Reply Like
  • Bobby Soxer
    , contributor
    Comments (9) | Send Message
     
    I'm new to this forum but GJN is cherry picking. In the other thread you referred to, Sir M also stated:
    "we see a 13%-20% immediate correction from here....being in the range of $3.59 to $3.30, all to occur by the FOURTH NET INJECTION REPORTED"
    This will not occur until MAY 9th. You can't hold him responsible for the recent weather forecasts which have trended colder and are currently propping up the market.
    Meanwhile, it will be interesting to see if the longs have the balls to hold their long positions at these inflated prices over the weekend or just dump out driving prices closer to $4.00

     

    12 Apr 2013, 09:43 AM Reply Like
  • GJN
    , contributor
    Comments (52) | Send Message
     
    CNBC just commented that NG production has been down in the midst of the prolonged winter and that is why NG has hit new highs today. Where is the production/injection floodgate Sir Monaco predicted? I'm not cherry picking at all Bobby - - just calling attention to the inconsistencies in Sir Monaco's articles. You just did the same with your comment. Also in your earlier post, Bobby, you also stated "Number comes in @ 14, a full 7bcf lower than expectations and it still isn't good enough to tank this market. Very frustrating." Today we hit a new high in NG. Everyone knows that eventually injection season will begin and we'll see an injection reported in the weekly - - but will the reported injection be enough to correct the NG price back down to 3.30 - 3.50 within 2 weeks as Sir Monaco has stated?
    12 Apr 2013, 09:54 AM Reply Like
  • Bobby Soxer
    , contributor
    Comments (9) | Send Message
     
    The next reported injection alone will not do it. I've read that despite the low rig count, NG production has never been higher. No question in my mind that weather is driving the current price of NG.
    As far as my comment about the inventory draw of 14 coming in 7bcf lower than expectations, I was basing this on Reuters' poll of 21. Apparently though, the surveys were all over the place. Platts had 20-24, Bloomberg 13, and Dow Jones 11.
    We WERE seeing a correction early in the week from the Sunday evening high of 4180 as the price fell to a low of 4004 on Tuesday but then the weather forecasts shifted and the buyers came back in. They don't call trading in NG "the widowmaker" for nothing...
    12 Apr 2013, 11:14 AM Reply Like
  • GJN
    , contributor
    Comments (52) | Send Message
     
    You can blame the weather, etc. - - but I think it's a supply/demand issue. Even if there is a 10,000 year supply of NG out there - - if producers aren't bringing it to market sufficiently to keep prices low, they are part of the reason NG prices are going up. Perhaps they want to recover their losses from last year??
    12 Apr 2013, 01:31 PM Reply Like
  • Sir. Monaco
    , contributor
    Comments (367) | Send Message
     
    Author’s reply » interesting speculation GJN, however from an operating companies point of view there is always more risk in trying to time the market rather than deal with what you have to the best of your ability (especially when you have ongoing operating expenses)

     

    so it is an interesting idea, but not a widespread tactic in our opinion, for if they try this (and then the natural gas market collapses as we think it will) then they could bk their companies,
    12 Apr 2013, 01:37 PM Reply Like
  • GJN
    , contributor
    Comments (52) | Send Message
     
    Perhaps NG Producers and GS, etc. are all in bed together to drive prices higher? By strategically holding back injections just enough to slowly create this price increase we are seeing in the market, the NG supply out there is irrelevant to what is currently happening??
    12 Apr 2013, 01:55 PM Reply Like
  • Sir. Monaco
    , contributor
    Comments (367) | Send Message
     
    Author’s reply » GJN, now that's truly a best selling novel!

     

    trust me, GS didn't like that I said in my opinion don't listen to them on the natural gas call, and they especially didn't like it when I pointed out they were so wrong with last years call,

     

    so I'm sure they are doing their best to not be wrong this time, but never would they risk incurring $5, or $10, or $15 billion dollar losses by trying to be right all the time,

     

    their board would be infuriated if that was what they were trying to do, and those responsible would be canned in an instant and be shunned from the marketplace,

     

    but things are interesting on the 44th floor, if you know what I mean,
    12 Apr 2013, 02:04 PM Reply Like
  • GJN
    , contributor
    Comments (52) | Send Message
     
    Not a novel my friend. Things are very interesting on the 44th!!
    12 Apr 2013, 02:11 PM Reply Like
  • GJN
    , contributor
    Comments (52) | Send Message
     
    WOW - - Joe Terranova just commented on CNBC - this year is different, don't look to seasonal factors in NG for 2013. He just went long NG.
    12 Apr 2013, 12:33 PM Reply Like
  • Sir. Monaco
    , contributor
    Comments (367) | Send Message
     
    Author’s reply » gold is down 4%, copper is down 2.5%, silver is down 5%, oil is down 2.7%, and

     

    natural gas is up 2.5%,

     

    we still maintain our position of natty falling and Joe Terranova's comments don't sway us otherwise,

     

    with decades of trading natty, the bubble is gigantic now, and the time of reckoning for the longs is coming,

     

    times will change, and Terranova's comments may have just announced to the hedgefunds that it is time to sell,

     

    otherwise, maybe one of the big houses are driving up prices, I remember reading that Suisse was short a couple weeks ago, and temperatures are changing so, in our mind this is no big deal, markets go up and markets go down,
    12 Apr 2013, 01:20 PM Reply Like
  • GJN
    , contributor
    Comments (52) | Send Message
     
    Hey - - I wouldn't go against Joe if I were you!! Markets may go up and down - - but this NG market seems to be going up up up, especially since late February. You are maintaining your position of NG falling to 3.30 and lower soon???
    12 Apr 2013, 01:35 PM Reply Like
  • Bobby Soxer
    , contributor
    Comments (9) | Send Message
     
    As soon as the weather forecasts turn mild, they'll dump out of NG faster than you can say "the most interesting man in the world"!
    13 Apr 2013, 05:01 AM Reply Like
  • GJN
    , contributor
    Comments (52) | Send Message
     
    We will see. It's mid April and I hope you're right!
    13 Apr 2013, 07:21 AM Reply Like
  • sterndragon
    , contributor
    Comments (4) | Send Message
     
    I think the NG market really should be down to at least $3.50. There is no reason for it to climb so much..

     

    Bentek is predicting a 5Bcf additional production by 2014... and I don't think demand will rise by 5Bcf, only coal to gas switching will absorb that at prices below $3. the forward curve is getting less steep, suggesting that the current price is only short term.
    15 Apr 2013, 01:11 AM Reply Like
Full index of posts »
Latest Followers

StockTalks

  • $USO $SPY $DIA Iran oil delivery beginning delivery gear-up, trade wisely, markets flooded with black gold,
    Dec 4, 2013
  • $SPY I just dropped a bombshell in today's "Wall Street Breakfast: Must-Know News" article (I was holding back on telling all about this)
    Nov 21, 2013
  • $TLT $DIA $QQQ $SPY after reading article by Bloom: http://bloom.bg/1f96PIZ I decided to c data http://1.usa.gov/1f96RAt
    Nov 18, 2013
More »
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.