Crude Oil Trader

Betting on Natural Gas, Part II: Investing Ideas

One of the best post I have seen in a while. This market is headed lower and winter demand can't stop it. We have never seen a glut like this in all of our trading years and look to retest the 2.40 area.


On Oct 23 11:59 AM Mad Hedge Fund Trader wrote:

> wwt I received another scratchy, crackling cell phone call from my
> drilling buddy in the Texas natural gas fields today. You could almost
> hear the dust on the line. The doubling of prices in the last month
> is totally bogus, and is nothing more than a short covering rally
> ahead of the seasonally strong run up to winter. Storage facilities
> are completely full, and while the production cutbacks have been
> substantial, they are still not enough. Some companies, like Chesapeake
> (CHK), are even suicidally boosting production in a desperate attempt
> to offset falling prices with jacked up volumes, at everyone else’s
> expense. This is all setting up a fabulous short selling opportunity,
> possible in early December, once the winter draws are priced in.
> There is still a huge risk that production will overwhelm storage
> as more new unconventional shale and tight gas deposits are brought
> on line, leading to another collapse in prices. A retest of the September
> lows is a gimme, and the $1 handle is still a possibility. So those
> of you who were nimble enough to bite a hunk out of the recent pop
> in CH4, better use any strength to cash in positions. I’d love to
> get more out of my friend, but I don’t think my aged, arthritic back
> could take another three hours driving down washboard roads in a
> beat up pickup truck with no springs.

How Much Natural Gas Remains in the USA?

Nobody can say how much in reserve we have. EIA info is based on outdated technology, so I would not put a lot into that. Regardless, we need to forge ahead with widespread "domestic" natural gas usage but be honest with ourselves that it only represents a "bridge fuel" to the future. We need some leadership out of Washington though, now that is a novel thought.

T. Boone is the real voice of reason when he says "we need it all"


Check out some Mega picks for Q4 > tinyurl.com/yas5lon

Outlook for Oil Services and Drilling

All of these driller names need to be avoided until natural gas turns, we are looking at October, and crude get's down around $58.

Energy Investing: Natural Gas Looks Especially Interesting

I have been calling for UNG to be a buy at $9.50 and the pitch forks come out. Natural gas will see $2.90, good call Marc.


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Boone Pickens' BP Capital Funds Down Significantly

I think BP will be fine. Let's revisit this at the end of December and I suspect T. Boone will be up. Oil will not stay down, it just can't.