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North American gas producers are killing their commodity’s big rally by opening more...

North American gas producers are killing their commodity’s big rally by opening more wells, putting the U.S. on track toward record gas supplies this year, according to a Bloomberg analysis. The 44% price rise in natural gas between Sept. 10 and Oct. 30 stalled as Chesapeake (CHK) and others added output in areas such as the Marcellus shale; COP and ECA brought back curtailed output.
Comments (12)
  • SoonerTed
    , contributor
    Comments (39) | Send Message
     
    Isn't that how the free market works? When prices go up, more capacity comes on line, and the price goes back down?
    14 Nov 2012, 01:06 PM Reply Like
  • wigit5
    , contributor
    Comments (3976) | Send Message
     
    I think at current levels though it is widely considered unprofitable still... which is why it's a bit shocking.
    14 Nov 2012, 01:29 PM Reply Like
  • TGCFG
    , contributor
    Comments (49) | Send Message
     
    It doesn't matter what you or I think or whats happening in the short term because NG wants to take out the $4.00 area plus it's cold early and snowing so the usage is going to be there for now.
    14 Nov 2012, 01:40 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2491) | Send Message
     
    Supplys are going to jump higher as MarkWest opens new processing plants in the Marcellus and Oneok completes gathering infrastructure in ND. I think $4 is the upper limit on prices for the next 3-5 years.
    14 Nov 2012, 01:55 PM Reply Like
  • TGCFG
    , contributor
    Comments (49) | Send Message
     
    I wouldn't speculate on what the price of NG is going to be in 3-5 years because anything can happen and things change quickly. I can't even forecast what I'm going to eat tomorrow let alone what the price of NG will be in the future. Oil has no directional trend right now so it looks like the best trade for now is natural gas. I really don't care to speculate where NG will be in the next 6 months, for now the trend for NG is up and that's where the money is to be made at the moment.
    14 Nov 2012, 02:03 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2491) | Send Message
     
    I'm not trying to play the nat gas futures, I'm saying if I were modelling prices going forward for business purposes, it seems unlikely that enough demand will come online to start soaking up supply to ever get prices to average above $4 in the next 3-5 years. Trading it is a whole different ball game.
    14 Nov 2012, 03:29 PM Reply Like
  • Loon-a-tick
    , contributor
    Comments (1444) | Send Message
     
    Yeah...despite whatever everyone says ...NG is trending up...until it starts to trend down or flat depending on the people who are throwing the bones.
    14 Nov 2012, 02:10 PM Reply Like
  • Alamo
    , contributor
    Comments (179) | Send Message
     
    The name of the future in natural gas is demand, demand and demand. Waiting on the weather to get colder or warmer is a difficult way for NG people to provide the huge liquidity requirements it takes to continue producing ---and expanding production which in turn justifies making those huge investments. Price stability that exceeds production costs is absolutely mandatory. Too little production destroys the future and too much,drives the price through the floor also forestalling the future if profitability is what the industry is all about.

     

    Using NG as the primary fuel in the transportation sector is the way to break the lack of demand conundrum. The constant in this catch 22 situation is to recognize that this economy cannot prosper absent mobility and use American NG as the most superior, most abundant and most efficient commodity we have to power American mobility. To achieve this will require:
    1) Expanding supply 2) build out of re-fueling infrastructure and
    14 Nov 2012, 03:38 PM Reply Like
  • kmi
    , contributor
    Comments (3992) | Send Message
     
    I differ in that I see both supply as well as demand out there, but not enough -capacity- to get the supply to the demand. And the problem there is that pipelines take a long time to permit and build.
    14 Nov 2012, 05:20 PM Reply Like
  • Mark Anthony
    , contributor
    Comments (3601) | Send Message
     
    The problem with the NG industry is there are too many players in the fields. Some of the NG players have got to be eliminated one way or another. That is inevitable.

     

    Right now, no NG producers are sustaining their business on cash flow only. They all borrow money from banks to spend to drill wells, and then hope to pay back the banks from future revenues. They can continue on indefinitely regardless of profit or loss, for as long as the banks are willing to lend them more money to drill the next shale gas wells.

     

    They will run into problem, when banks decide not to lend more, and begin to ask for the money to be paid back. I believe such a day of reckoing is coming pretty soon.

     

    Stay clear of the NG sector. The coal mining sector is where you want to be, not the NG sector.
    14 Nov 2012, 03:43 PM Reply Like
  • RedRipper
    , contributor
    Comment (1) | Send Message
     
    I'm a 78 yr old male. Married. Retired from USN on 4 Jan 1971. Worked as superintendent of Manufacturing Co. Gave that up and moved to FL. Bought commercial fishing boat and skippered same.
    Fishing restrictions were applied and really hurt the small fisherman,
    Sold boat, moved to north FL. Started raising beef cows, after a few years, market price fell on beef cows. Sold cows and moved back to VA.
    Wife and I tried some bank stock many years ago. Banks was sold many times as mergers occurred etc., ended with 5 X value of original stock price when we sold. Also had a mutual fund that paid well when sold. Never fooled too much in stocks, but have a bit of interest in energy stocks now. Especially, with the discovered oil shale fields in the USA. Reading reports etc. and watching a few offerings. Trying to decide if good investment, or not.
    15 Nov 2012, 07:40 AM Reply Like
  • chechequa
    , contributor
    Comments (24) | Send Message
     
    I`ve been long COP for about a year now and would gladly give up some dividends for price appreciation. It has gotten very old every time i look at the daily numbers to see COP in the red.
    15 Nov 2012, 01:42 PM Reply Like
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