Ron2008

Gold to Natural Gas Ratio: What It Could Potentially Mean

"If winter turns out to be a little colder than expected, then we could draw down on those supplies a lot faster than expected."

That's funny. A "lttle colder" will get rid of the highest inventory in history? I doubt it.

Someone said if we have the coldest winter that happened this decade, we we still have 15% more than the 5 year average in inventory at the end of this winter.

Today in Commodities: Dust Starts to Settle

Melsen, chart out a NG futures chart. The prices peak in Nov and DROP through the winter. The last 5 winters have had higher prices in Nov than Feb.


On Dec 10 08:52 AM Melsen wrote:


> Regarding NG trading at higher prices in winter, it is only natural
> considering seasonal demand and drawdowns in inventories.

Today in Commodities: Crouching Tiger Hidden Commodity

You can't see that there is no demand for oil right now? That refineries are shutting down because of a lack of demand? That there are millions of barrels of oil and oil products in floating storage? That Cushing is getting very full?

Only funds think oil should be above $70 right now.

On Dec 10 05:30 PM rick12345 wrote:

> Oil has been dumped for no particular reason that I can see. While
> it should be at $80 - $85 and heading toward a $100 average, strangely
> it hasn't.

Natural Gas: U-Turn Follow Up

NG bulls need to read this article. Not some chart saying 11.25.

U.S. imports of liquefied natural gas will rise 34 percent this year to about 470 billion cubic feet and another 40 percent in 2010, the Energy Department forecast on Nov. 10.
www.bloomberg.com/apps...

Natural Gas Currently Offers the Best Near-Term Investment Opportunity

"Meanwhile, US natural gas production is plummeting due to the lack of drilling activity; producers need to see prices rally back over USD6 per MMBtu to start drilling and stem these production declines."

Are you sure about that? I don't see any sources for that price. But I did find this.

Producers in the Eagle Ford can break even when natural gas is priced as low as $3.88 per million British thermal units, the firm said, versus break-even prices of $5.18 in the Barnett, $3.74 in the Marcellus and $4.49 in the Haynesville.
www.chron.com/disp/sto...

Here's more data on consumption that is opposite of what you said.

Consumption will fall by 2.4 percent this year and remain flat in 2010, according to the Energy Information Administration

Why Did Natural Gas Spike?

NG went up because the extremely short hedge funds had to get out by buying. That's it.

Their net short went from 139,508 (9/01) to 93,812 (9/29). A decrease of 45,696. Plus they dropped almost 20,000 spreads which were probably short the front month.

Natural Gas Currently Offers the Best Near-Term Investment Opportunity

You're ignoring one huge point. NG inventories are the highest in history. Even the coldest winter in history will not take inventories below the 5 year average by the end of winter.

The futures prices for 2010 are already at or above $6.00. Rigs have been added every month for a while now.

NG consumption is rising this year? You don't have a chart from EIA to back up that statement.

July consumption was 3.9% lower than July 08.

You also spend way too much time on LNG, which is such a tiny part of the market that it isn't worth including.

How Much Natural Gas Remains in the USA?

Mark, using your logic, since the proven reserves were only 164,041 in 1998, we should be out of NG by now.

Natural Gas, And Lots of It

The 5 year average has injections going 2 weeks into Nov. The first withdrawal from storage, based on the 5 year average is the 3rd week of Nov.

The 5 year average of injections from the report this week through the end of the injections is 374 (EIA data). That would put storage at 3.9 TCF.

Also, while the total number may have some room left, getting the NG to these storage facilities is the major problem.


On Sep 29 10:14 AM Jack Yetiv wrote:

> I've now been reading for months about how storage is going to fill
> up causing gas to be "dumped" on the market, but the math does not
> add up. Experts are projecting an injection of 50-60 BCF to be reported
> this Thurs, Oct. 1, which should put total amt of gas stored at 3.6
> TCF. I have read we have somewhere between 3.8 and 4.0 TCF of storage
> capacity, with the best number, I believe, being the midpoint, 3.9
> TCF. That means we can store 300 BCF more before storage is full
> (yes, I realize different storage locations may have differential
> fills, but I am talking across the US).
>
> If we continue storing an average of 55 BCF per week, on Oct. 29,
> we should be at about 3.8 TCF--just approaching full on the 3.8 TCF
> storage capacity number, and a bit under full if you believe the
> 3.9 TCF number, and even more under if you believe 4.0 TCF of storage
> capacity.
>
> Usually withdrawal from storage starts in the beginning of Nov.
> Therefore, unless I'm missing something, there won't be many days
> (if any) of "dumping" before withdrawal from storage begins.
>
> Jack Yetiv

What Will Change for Natural Gas ETFs?

The NG prices for futures in 2010 range from 5.85 to 7.00. That is plenty for the NG producers to lock in the price and start drilling. They already have been adding rigs the last few months.


On Sep 28 11:21 AM GMiki1 wrote:

> What effect will the shutting down of more wells based on lower prices
> that the CFTC can force have on long-term prices of natural gas?

Natural Gas Trading: Right Now, It's the Wild, Wild West

Sell now because prices will drop because they are taking their profit.

But be careful.

On Sep 19 11:52 AM Genesis wrote:

> So... if the shorts are trying to take advantage of the UNG rollover,
> and the short squeezers are taking advantage of the massive short
> positions, how do we take advantage of the traders who are taking
> advantage of the ones who are taking advantage of the UNG rollover?
> ;)

What's Driving Natural Gas?

Futures for 2010 are all above $5.50. The drilling and production won't fall off as much as you think.

On Sep 18 01:52 PM Mmarrkk wrote:

> bradiop: your "evidence" that there is an increase in gas supply
> is somewhat short sighted. The additional supply comes from shale
> gas plays, plays where the wells exhibit a 80% decline ratio in the
> first year!! At sub $3/mcf, no one will drill these wells for long
> and when you stop drilling new wells, the old wells are declining
> quickly and production drop rapidly!

Natural Gas Trading: Right Now, It's the Wild, Wild West

Since summer NG contracts are always lower than winter contracts, when UNG rolls those contracts it will lose money. It is not a good long term investment.


On Sep 19 04:30 AM aarc wrote:

> So, when is the time to buy UNG?
>
> When it becomes an over-performer and the undisputed leader of the
> pack perhaps with backwardation to go along in a year, two or three
> years from now?
>
> Seems like trend trading instead of investing.
>
> I invest in natural gas.
>
> So I will buy more UNG when the going gets tough and UNG gets hammered
> some more to the ground.
>
> Then I will sell, sell, and sell UNG when it becomes the American
> Idol or the over-achiever ETF and the undisputed King of the Hill.
>
>
> That is what I call basic investing principle.

Natural Gas Trading: Right Now, It's the Wild, Wild West

Isn't there some way to get this guy banned to prevent him from changing his name and posting that link everywhere?


On Sep 19 10:28 AM your-trade-plan wrote:

> market may just keep going higher because too much doom and gloom
> sentiment
>
> good articles 4 slow news day: tinyurl.com/n854tt

Natural Gas Trading: Right Now, It's the Wild, Wild West

That's not quite what I meant. 84% of the open interest (positions held overnight on the day the DCOT report is calculated) are held by someone other than producers/users. We don't know what percent of trades are spec-spec trades.

There is a hard spec position limit of 1,000 per person that has to be met before the last 3 trading days. So for the Oct contract, which the last trading day is 9/28, specs have to have 1,000 or less Oct contracts by the close of trading on 9/23.

Dian was correct in her statement too. UNG has to be down to 1,000 positions by 9/23 and out by the close of trading on 9/28 because they don't want to take delivery. They can't take the risk of waiting for the last day, so they roll 2 weeks before expiration.

One time (Oct 08 contract) oil jumped up 16.37 on the last trading day. Probably because of someone waiting too long to get out. Did supply/demand say that the price should be 120.92? No. Not when the price was 97.88 two trading days prior. Open interest was 23,130 the day before expiration and 7,780 at expiration. The highest OI at expiration in the last 3 years.

With NG storage being about full, it is a big risk now to be holding positions going into the last trading day.

When OI goes from 186,000 to less than 2,000 that means that only 1% of the contracts are held into expiration. That is far too low a percentage of the futures contract to reflect true supply/demand prices in the real world.

So about 184,000 longs and about 184,000 shorts trade with each other to get out before expiration. Who moves first kind of determines which way the price moves. It's a game of chicken.

There have been huge differences between wheat futures at expiration and cash prices. That was the start of the uproar about futures not matching cash prices at expiration.

A wide disparity between futures and the cash market makes futures worthless for commercials trying to hedge their commodity.


On Sep 19 03:51 AM Aricool wrote:

> Dian,
>
> You say "UNG has also become a *large and predictable player* that
> has to roll because ***it has no capability of taking the contract
> to expiry***. " However, Ron2008 says 84% of NG futures contracts
> are trades between speculators and are not delivered. Seems to me
> one of you have to be wrong. The way you describe it matches how
> I understood it, but if so the front contract's end price would always
> have to reflect true supply/demand b/c the speculators would of had
> to sell ahead of time.
>
> Maybe you both can duke it out so I can see who wins! I'm confused!!!
> The true answer would be very informative to predict future NG price
> behavior.
>
> Thanks,
> Ari-