Natural gas (UNG -4.1%) tumbles as Weather Group LLC revises its forecast and predicts...


Natural gas (UNG -4.1%) tumbles as Weather Group LLC revises its forecast and predicts above-normal temperatures in the eastern U.S. from Feb. 7-11.

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Comments (12)
  • wigit5
    , contributor
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    Terrible when your controlled by the weather
    28 Jan 2013, 10:50 AM Reply Like
  • IPOChaser
    , contributor
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    Let me get this straight. Its predicted by a single weather outlet that is MAY be a little warm for four days over a portion of the United States in over 2 weeks from now and therefore natural gas is worthless?
    28 Jan 2013, 10:58 AM Reply Like
  • Glenn Doty
    , contributor
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    Not worthless, just worth less.

     

    I think this is a severe over-reaction, because I think NG was considerably underpriced before the forecast outlook... but the entire sector was devastated by last-year's winter-that-was-not... and this year has been far warmer than usual, which is making everyone jumpy. So they over-reacted.

     

    *shrug*

     

    I still see NG significantly rebounding by April, but the extent to which it rebounds is starting to look more questionable with every warm-weather forecast that comes out.
    28 Jan 2013, 11:15 AM Reply Like
  • Drew Robertson
    , contributor
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    worth less as is Heating Oil this AM.
    28 Jan 2013, 11:06 AM Reply Like
  • Tamerlane
    , contributor
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    Are you kidding me? This year has been warmer than usual??? Where? Except for November, which is more than made up for by Jan and Feb, where and when was this winter warmer than normal? Anyway, I think these shenanigans have to do with expiration. May have been a lot of leveraged longs who cannot take delivery and had to dump.
    Timur
    28 Jan 2013, 12:14 PM Reply Like
  • wigit5
    , contributor
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    Tamerlane it certainly depends on where you live but here in NE Tennessee it has been very cold some weeks/days and very warms... it just seems more extreme changes... this week we are expecting 60 degrees F tomorrow and snow on Friday... I don't think these weather guru's have a clue and are just trying their best to make something of nothing.

     

    We'll see in the spring when temps continually rise whether this years weather turned out to be normal or not...
    28 Jan 2013, 12:17 PM Reply Like
  • Glenn Doty
    , contributor
    Comments (1116) | Send Message
     
    You do of course realize that there is actual DATA out there, rather than your personal opinion based on faulty memory.

     

    It has been far warmer this winter than average, but I believe this is especially true in the Northeast and the Eastern Seaboard, which is where most people in the U.S. happen to live. That's why even though this winter is cooler than last-year's winter, the total heating degree days have been lower, because the region where most of the country's population lives has been warmer.

     

    I believe that it's been cooler in the Midwest, the High Plains, and some of the Big Sky country, and it's been average in the Southwest and the Pacific Coast.
    28 Jan 2013, 02:04 PM Reply Like
  • Drew Robertson
    , contributor
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    Even though it was really really cold here last week a little research on Weather Underground reminded me that it hasn't been THAT cold this winter here in NYC. But more importantly the Northeast relies on HO not NG for heating. So there's that.
    28 Jan 2013, 02:12 PM Reply Like
  • wigit5
    , contributor
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    As long as Nat Gas here in the US is restricted to North American soil I don't believe we'll see $5 gas... anything close to $4 and Nat Gas producers start opening more wells.
    28 Jan 2013, 02:14 PM Reply Like
  • dnpvd51
    , contributor
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    At $4 the NG producers lose a ton of money. But I guess they need cash even at a loss.
    30 Jan 2013, 01:01 PM Reply Like
  • wigit5
    , contributor
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    I think you are generally right (most production isn't profitable at $4) I just don't understand why we haven't seen any names go under yet... Nat gas has been sub $4 for a whole year...

     

    Although that being said we may see Chesapeake after the departure of the CEO go up for sale either in whole or pieces. (according to some rumors/blurbs on here).
    30 Jan 2013, 01:05 PM Reply Like
  • Glenn Doty
    , contributor
    Comments (1116) | Send Message
     
    Wigit,

     

    You have to remember that many of the inventory wells were drilled from the time period between 2006-2008, when natural gas was trading $6-$9/mcf. Much of the profits on gas were sunk into new well drilling, so that literally hundreds of inventory wells were being drilled every month.

     

    When the price plummeted after the crash in late '08, it was assumed the price would rebound quickly, and the market didn't respond quickly enough... but the little-guys probably were the ones fastest to respond. My suspicion is the lesser players have been slowly drawing down their inventory wells with minimal drilling for the express purpose of keeping leases, meeting contracts and keeping the lights on, but they are mostly eating down their inventory wells which were paid for by profits during the gas rush.

     

    This is all speculation, but it would fit.
    30 Jan 2013, 02:39 PM Reply Like
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