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Re: nat gas 2.25/2.30 on 1-19/CJ/Wayne

Hi Wayne, CeeJay,

Wayne: I put your post here to keep things clear:
"No...I don't buy or sell anything based on the weather...I suppose there are extreme weather phenomenon that can affect the price of some commodities but they have to be extreme and it helps if they are long lasting. All those people in the ng biz have calculated in the normal weather patterns including, I'm sure, the possibility of the occasional abnormal burp.

In addition, as I have stated before, we have a lot...a lot...of NG and we are finding a turd load more every day. "
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Wayne:

First, I set your last sentence aside for now as being emotional. Yes they are finding a lot, but the real issue is what is being brought above ground and when. What is it ?? Dry gas or Liquids !!! There has been a big shift toward the liquids to raise cash for the balance sheet !!! Yes it has driven price down, how far, how fast is still an unknown. Yes there has been an effort to reduce the amount of dry gas, but they want the oil and ethylene (read plastics).

When the first producer financial statements start to come out for 2012 a clearer picture will form. Maybe the weaker will be "GOBBLED" up !!!!

Anyway, the Weather that CeeJay posts and we often discuss IS what is coming down the pike and will impact the bars that you will see on your daily chart. Look at the last two Thursday storage reports .... Both "non events" everyone knew where things where headed, the report just confirmed it and the market went down a bit, but without the "wild whipsaws" that are customary !!!!
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Now on this:
"All those people in the ng biz have calculated in the normal weather patterns including, I'm sure, the possibility of the occasional abnormal burp."

Yes, and they "understand it well" and their "gas" is covered [you can read that quote 2 ways].

Look at your utility bills and all of the regulatory crap in there. The utilities have their butts covered and you will pay for it.

Unfortunately, Ng is not quite like Gold bars and as easily stored. So that brings on another huge issue of balancing production/storage(with costs)/and consumption which all vary with time and "WEATHER". And much of what goes on to meet "current needs" does not show up directly in the futures market.

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Now for 2012 here is what Bentek sees ............

$1 handles in natural gas prices expected in 2012

Mild weather across much of the U.S. this winter has left record-high natural gas inventories in storage at a time when production levels continue to soar. BENTEK's new Market Alert reports that despite 2 Bcf/d more demand per degree in 2011 and record power burn, just two months of mild weather have erased the storage deficit, leaving a 500-Bcf and growing surplus over the five-year average. These fundamentals will have lasting implications for U.S. natural gas prices well into 2012; BENTEK expects gas prices to drop to $1 handles for periods later this winter and again in the fall.

Due to lagging demand in response to mild weather, Henry Hub cash and prompt month futures prices have fallen more than $0.80/MMBtu since Nov. 1. January's month-to-date spot price average is the lowest level for January since at least 2004. BENTEK reports low storage withdrawals in early winter and resulting record-high inventories will mean extreme downward pressure on prices in March, when cycling requirements will force withdrawals regardless of demand or pricing economics. As these factors exacerbate the supply-long natural gas market this year, a new near-term price floor will be set.

Key Takeaways:

The natural gas market is poised to find a new, near-term price floor in 2012, with Henry Hub cash and other supply-area prices bound for $1 handles as early as later winter as mild weather has exacerbated a supply-long market.

Despite 2 Bcf/d more demand per degree in 2011 and record power burn, just two months of mild weather have erased the 2011 storage deficit, and have left a 500-Bcf and growing surplus over the five-year average.

The low withdrawals in early winter and resulting record-high inventories will mean extreme downward pressure on prices in March when storage cycling requirements will force withdrawals, regardless of demand or price economics.

Given continued production growth and normal demand, storage inventories will test peak working gas capacity of 4.2 Tcf and set a price floor by fall.

For Wayne:
Read the last 4 Paragraphs above - The Key Takeaways ........

For CeeJay:
I have no clue on this statement: In Para. above Key Take aways ....
"resulting record-high inventories will mean extreme downward pressure on prices in March, when cycling requirements will force withdrawals regardless of demand or pricing economics."

I don't know what "cycling requirements" mean here at all !!!!!

For Coral:
So, Coral ......I'm not going to call the $1 range my projection, although i suspect it will get there.
So, Have at it with those one liner NM posts with no meaningful info.
If you use the "Randolph 'penny per post' " that ought to keep you busy for awhile.

Lee

Messages In This Thread

Re: nat gas 2.25/2.30 on 1-19/CJ/Wayne
Nat Gas/CJ/Wayne
Re: nat gas 2.25/2.30 on 1-19/CJ/Wayne
Re: nat gas 2.25/2.30 on 1-19/CJ/Wayne