Seeking Alpha

Sir. Monaco's  Instablog

Sir. Monaco
Send Message
  • RUETERS ARTICLE / PARTICIPANTS SEE NATURAL GAS FALLING AS WEATHER MODERATES 0 comments
    May 14, 2013 3:00 PM | about stocks: APC, BBG, BP, BTU, C, CHK, COG, COP, DVN, ECA, ELP, EQT, FST, GDX, GLD, GS, JPM, KWK, LNG, MS, NFX, QEP, RRC, SLV, SPY, SRE, SWN, UNG, UPL, WPX, XCO, XEC

    AS MANY OF YOU KNOW, WE HAVE BEEN CALLING THE NATURAL GAS MARKET A BUBBLE AND WE CONTINUE TO BELIEVE SO. PRICES ARE MUCH TOO HIGH TO BE JUSTIFIED GIVEN THE IMPROVEMENTS IN GAS DRILLING, AND THE PROJECTED INJECTIONS AND CURRENT SUPPLY LEVELS,

    HERE IS A PASTE OF A REUTERS ARTICLE....INFORMATION IS PRICELESS, WHILE NATURAL GAS FAIR VALUE IS ONLY $3.20

    2013'S GAS PRODUCTION TO EXCEED LAST YEARS BY 1%

    -

    http://www.reuters.com/article/2013/05/14/markets-nymex-natgas-idUSL2N0DV21N20130514

    By Joe Silha
    NEW YORK, May 14 (Reuters) - Front-month U.S. natural gas
    futures edged higher on Tuesday for a second straight day,
    backed by cool Northeast weather early this week that has lifted
    demand despite milder forecasts for later this week and next
    week.
    Gas prices slid more than 11 percent in the previous three
    weeks as moderating spring weather curbed heating loads but have
    gained nearly 2 percent so far this week as temperatures cooled.
    Chart traders agreed the market was oversold after a
    three-week slide and due for a bounce, noting prices have tested
    technical support in the $3.90 per mmBtu area several times over
    the last week but so far have not settled below that level.
    "Natural gas prices are attempting an upside breakout on
    talk of cooler temperatures. However, without a significant
    shift in the weather, we still see the fundamentals as bearish,
    with pressure on the bulls to head for the exits over the next
    month or so," Citi Futures analyst Tim Evans said in a report.
    At 12:15 p.m. EDT (1615 GMT), front-month gas futures
    on the New York Mercantile Exchange were up 5.4 cents, or 1.4
    percent, at $3.979 per million British thermal units after
    trading between $3.923 and $4.01.
    The front contract hit a 21-month high of $4.444 two weeks
    ago, then posted a five-week low of $3.883 last week.
    Some traders noted that speculative investment funds may be
    giving up on the recent bull run, at least temporarily. Last
    week they trimmed their net long position in natural gas
    futures, options and swaps for the first time in three months,
    according to government data released on Friday.
    Most traders, expecting milder weather to lead to more
    above-average weekly inventory builds, see only limited upside
    from here until hotter weather arrives and forces homeowners and
    businesses to crank up air conditioners.
    Commodity Weather Group said it expected U.S. temperatures
    to mostly range from normal to slightly above normal for the
    next two weeks, but no major heat was forecast for the period.

    ANOTHER BIG INVENTORY BUILD EXPECTED
    Data from the U.S. Energy Information Administration last
    week showed that total domestic gas inventories rose by 88
    billion cubic feet to 1.865 trillion cubic feet.
    The weekly build was above the Reuters poll estimate of 83
    bcf and well above the five-year average increase for that week
    of 69 bcf, and initially pressured prices.
    The gain was the fourth of the stock building season and
    exceeded market expectations for the second straight week. It
    trimmed the deficit versus the five-year average by 19 bcf, but
    stocks are still 99 bcf, or 5 percent, below that benchmark.

    That deficit is likely to shrink again in Thursday's EIA
    report. Injection estimates range from 90 to 106 bcf, with most
    in the mid-90s. Stocks rose 56 bcf during the same week last
    year. The five-year average increase for that week is 83 bcf.

    PRODUCTION CLIMBS DESPITE FEWER RIGS
    Baker Hughes data on Friday showed the gas-directed
    rig count fell last week by four to an 18-year low of 350.

    Despite the steep decline in dry gas drilling, production
    has not slowed much, if at all, from 2012's record highs.
    The EIA last week raised its estimate for domestic natural
    gas production in 2013, expecting output this year to be up
    about 1 percent from last year. If realized, it would be the
    third straight year of record production.

    Disclosure: I am short UNG.

    Additional disclosure: natural gas

    Themes: natural gas Stocks: APC, BBG, BP, BTU, C, CHK, COG, COP, DVN, ECA, ELP, EQT, FST, GDX, GLD, GS, JPM, KWK, LNG, MS, NFX, QEP, RRC, SLV, SPY, SRE, SWN, UNG, UPL, WPX, XCO, XEC
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 (0)
Track new comments
Be the first to comment
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.