Nat gas pricing is sufferng from too much supply from the new shale fields and too little demand. Both can change but probably not for a year or so. Shale plays suffer a very fast decline rate and drilling has been artificially high to put leases into HBP (held by production) status. otherwise, they lapse after a period, so companies can't lease up rights then just sit on them. Demand increases depend on industrial users which depends on the economy, plus new useage for such thing s as transport, whichdepends on the government. So far the administration has been clueless about converting such uses as long haul trucking to NG.
Natural gas - where is the bottom
- Thread starter sk8erboy
- Start date
how did you know that?
September 2009 showed a low of 2409 on a continuous, adjusted basis.
We get below 3000 in the front month and I'll buy a Vertical Bull Call Spread in the G-11 contract with three or four dollar wide strikes.
Personally, I suck at market timing but do well enough at risk/reward to have made a good living in the business.
As a side note, the V0-X0 calendar spread has gotten a pretty good bid since the first of the month.
We get below 3000 in the front month and I'll buy a Vertical Bull Call Spread in the G-11 contract with three or four dollar wide strikes.
Personally, I suck at market timing but do well enough at risk/reward to have made a good living in the business.
As a side note, the V0-X0 calendar spread has gotten a pretty good bid since the first of the month.
Never to zero.
Like onions, Natty has some serious and widescale commercial/industrial demand on an industrial scale.
Unlike onions, Natty has a calorie-adjusted BTU cross-over correlation with other fossil fuel hydrocarbons like crude oil, and an important but less obvious correlation with uranium oxide. For example, alot of power plants have a switching capability to go back and forth between heavy fuel oil or nat gas (it's called 'Btu switching' in the business).
So, pickles or tomatoes and other such condiment embellishments could not keep onions from going into the shitter. Onions are an 'option', a consumer 'choice' as it were. (granted, I personally believe the Vidalia Onion to be a necessity with anything my wife kills/cooks)
Heating and electrical power are necessities. And Btu switching, the ethanol crush, and heavy residential/commercial useage will keep it from zero.
The problems for market timing (besides time horizon and capitalization) is supply - continental North America is floating on Natural Gas. Literally. And I'm afraid that weather HDD's or a Transco Z-6 basis spike would provide only a temporary respite for the bulls as it relates to a much longer term fundamental supply picture in terms of price improvement.
Like onions, Natty has some serious and widescale commercial/industrial demand on an industrial scale.
Unlike onions, Natty has a calorie-adjusted BTU cross-over correlation with other fossil fuel hydrocarbons like crude oil, and an important but less obvious correlation with uranium oxide. For example, alot of power plants have a switching capability to go back and forth between heavy fuel oil or nat gas (it's called 'Btu switching' in the business).
So, pickles or tomatoes and other such condiment embellishments could not keep onions from going into the shitter. Onions are an 'option', a consumer 'choice' as it were. (granted, I personally believe the Vidalia Onion to be a necessity with anything my wife kills/cooks)
Heating and electrical power are necessities. And Btu switching, the ethanol crush, and heavy residential/commercial useage will keep it from zero.
The problems for market timing (besides time horizon and capitalization) is supply - continental North America is floating on Natural Gas. Literally. And I'm afraid that weather HDD's or a Transco Z-6 basis spike would provide only a temporary respite for the bulls as it relates to a much longer term fundamental supply picture in terms of price improvement.
I sold spot gas for nineteen cents ($0.19), about 2 years ago. It was an operational issue on a pipeline, but GDA gas was being sold at -.20's and so, adjusting for the posting that day, some gas almost traded at negative pricing for those gda discounters!
Net-long positions in futures and options combined in four natural-gas contracts decreased by 17,373 futures equivalents to 51,306 in the week ended Sept. 28, the CFTC data showed.
Spec longs are bailing on Natty now that the hurricane season window has pretty much closed. I don't know that the HDD forward curve is all that bullish either.
Spec longs are bailing on Natty now that the hurricane season window has pretty much closed. I don't know that the HDD forward curve is all that bullish either.