BrotherMaynard

Plenty of Natural Gas: Exploration and Production Companies Keep Increasing Oversupply

excellent point about shut-in storage -- it should be considered inventory. the future supply problem b/c of lower rig counts is overblown. that's why curve flattening should be the next stage of this cycle.

just to expand on the EOG comment, stephen schork today:

"several Northeast pipelines started issuing operational flow orders (OFOs) in an apparent attempt to limit shippers exceeding their contractual limits...In addition to the Labor Day holiday, last week’s report also comprised the ratchet clause rollover. Injection ratchet clauses in the East require shippers to inject working gas through scheduled stages in order to preserve operational integrity. By September 01st no more than 80% of storage can be filled....According to the latest estimate from the EIA, maximum storage capacity in the East is 2.178 Tcf. As of two reports ago, week ended August 28th, estimated storage was 1.78 Tcf. That calculation was already 81½% of capacity or 1½ points above the ratchet. In other words, storage in the East over the last two reports was at operational capacity. Thus, the OFOs were a likely means to hold storage below the 80% threshold...What’s so bullish about that? Absolutely nothing."


here's the rest of schorks note: www.cnbc.com/id/327973...

Boone Pickens Puts His Money Where His Mouth Is on Energy

i don't see how you can divine any information from tbp's picks given that he has so many ulterior motives...who knows if the fund is just another marketing scheme? After all, a 98% loss is roughly the return most advertising companies get on their marketing dollars...

T. Boone Pickens' Hedge Fund Concentrates on Energy, Drops Basic Materials

how'd that energy fund work out for pickens in 2008?

whats that, you say...-95%?

amazing that warren buffett gets routinely thrown under the bus for his financials yet t boone pickens is praised as if he's some sort of luminary when it comes to investing in anything. way to go on that -95% return, t boone. oh yeah...and well done on prop 10.

Beaten Down Natural Gas Likely to Stay Down, Making Producers a Short

horizontal drilling production rates only just went negative in february. those are the most productive nat gas rigs out there. so despite the aboslute fall in # of rigs, the quality and productivity of rigs that have been laid down for months is much lower. rigs cost money and make no mistake, e&p's won't waste a lease.

Beaten Down Natural Gas Likely to Stay Down, Making Producers a Short

From a note put out by Gil Yang at Citi, today:

"We believe that natural gas prices below the cost of marginal reinvestment is no longer sufficient to balance the market. Instead we believe that prices may need to fall below the marginal cash cost of existing production to incentivize shutting in production from existing wells. Thus, prices may need to fall to below marginal cash production costs which are probably in the $2-3.50/Mcf
range.

Our new commodity price forecasts reflect this view where we are setting 2Q and 3Q prices to levels anticipating several weeks of gas falling to ~$3.50/Mcf and below and possibly below $3 for a short time later this year."

Beaten Down Natural Gas Likely to Stay Down, Making Producers a Short

"Although I do understand (and agree) that dollar weakness should act to support all commodities in general"

oil and the dollar have nothing to do with supply and demand. yes a euro can buy more dollars, and therefore buy more oil, but what about the people already holding dollars? A weaker dollar, in and of itself, means that they can't buy as much oil as before. Last time i checked, the dollar was the most pervasive currency on the planet. if you look at any period during the 90's, this dollar/oil inverse "trade" did not exist. i have an idea why it started picking up during the past few years, but i'm not going to say it, as its far from conclusive.