April Natural Gas

April may indeed be the correction month I just spouted about, good solid technical close today and brother crude is destined to test the $50 resistance level after todays close above $45.30.

I still think a natty rally will be muted in terms of short-covering corrections of years past, think there will be plenty of supply for sale overhead to mute it.

But for now, rally ho!
 
EIA Expectations: @10:30 EST Today
Paribas -100,
PIRA -97,
Bentek -102
Last yr -139
Last week -101
Total 1895
Yr vs Yr +233
vs 5 Yr +199

My good guy is -105
 
Any thoughts on supply destruction through lack of drilling this yr to correct the mkt? 2010 hopeful for the bulls? Chesapeake shutting in helpful?
 
Watch the rig count for Patterson Energy (PTEN). They are a land-based natural gas driller with no debt on their books. They are now down to 128 rigs. They have 350 on hand.

The Baker Hughes Rig Count peaked around 2,031 in August of 2008. Goldman Sachs is looking for it to drop 42% from Q3-2008 to Q2-2009. That would entail a target of 1178.

We just hit 1170 this week.

916 were exploring for nat-gas, and 241 for oil.

http://finance.yahoo.com/news/Number-of-active-oil-rigs-apf-14570837.html

NOTE: The 2002 trough saw a 32% decline in the rig count. 1999 saw a 49% reduction.
 
US nat gas production is 56bcf/d.

If wells decline lets say 30%/yr (shale declines faster), then next year's production should be 39bcf/d given no replacement production.

Back of envelope calculations by an outsider such as myself, with the assumption that breakeven production rigcount is probably somewhere around 1600. So assuming it takes 1600 rigs to produce 17bcf/d for 1 year and av. output per result of 1 rig is linear at .01133 bcf/d, then w/ 500 rigs less we are losing production next yr and into perpetuity of 5.6bcf/d that would be otherwise produced. Thats a 2073bcf deficit for next yr.

... assumes every rig drills the same size project (of course not true in the real world).

The alternative is that drillers are drilling the lowest marginal cost wells (big producers) with those 1100 rigs, so loss of supply next yr will likely be a bit less. Maybe half or 1/3rd of lost output ? Maybe 700bcf-1000bcf lost supply next yr (2-3 bcf/d) is realistic.
 
12,000 contracts in 5-minutes.

WHAT HAPPENED?

Was this a massive short covering?

Is someone getting squeezed??

::Frothing @ mouth::


:eek: :D :eek: :D
 
its all this and more in the big picture

www.youtube.com/watch?v=oIPVs-Ryh3M

must be alot of shorts out there in all asset classes ( duh )

Energy headlines as per bloomberg

( excerpted below )


-Oil Rises Above $50 on Speculation Fed Debt-Buying Plan Will Spur Growth Crude oil rose above $50 a barrel, reaching a three-month high, after the U.S. Federal Reserve announced plans to spend $1 trillion buying back debt.-


-Nymex Natural Gas Gains the Most in 29 Months on Fed's New Stimulus Plans Natural gas futures rose the most in 29 months on speculation a plan by the Federal Reserve to increase its efforts to shake the economy out of recession will boost energy demand. -


:cool:
 
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