Nat Gas inventories very high

Discussion in 'Trading' started by silk, Nov 17, 2005.

  1. silk


    Nat gas inventories well above 5 year average and within 1.7% of last year's levels.

    So what is the problem?

    Is nat gas just another commodity bubble created by greenspan easy money.
  2. well natural gas season just begun. It may by 1.7% above last years levels but demand could be easily much higher than that if it turns out to be a cold winter.
  3. silk


    So you saying nat gas prices are nearly double last year because it might be a cold winter?
  4. MRWSM


    Screw natural gas, get yourself a geothermal electric heat pump with a closed pipe loop. 1/3 the cost of natural gas and 250% efficient. You can also add to it with some solar heat panels and learning some passive solar designs.
  5. Our natural gas production is still significantly constrained by damage in the Gulf. In a normal year, demand suprises such as cold weather could be met with spare production capacity. This year, it's not clear whether there is enough capacity to react to abnormal demand. Unlike crude and products, natural gas can't be imported in significant volumes. Hence the risk premium.

  6. silk


    No, there is plenty of natural gas in storage. We could have the coldest winter in history and supplies would be adequate.

    Last year was very cold winter and there was still 600 billion left in storage. And November was already milder than average so whats chance that this season would fall into coldest winter ever category??

    But i'm no expert.
  7. mhashe


    Market prices have dislocated from fundamentals and now run on pure speculation. Too much money chasing too few opportunities.
  8. I'm not sure it is as simple as looking at storage. For one thing, there is the relationship to crude and more importantly heating oil. A lot of utilities use nat gas for marginal generating capacity, so there is a tradeoff with heavy fuel and coal. Also, there is the fear that new gas supplies are not being found to offset current high levels of production. Hence, the push to invest in LNG. At some point the shit could hit the fan. There is no strategic reserve of nat gas either.

    Probably there is a significant speculative component in the current price, but people realize that nat gas is the fuel of choice and at some point there will be a shortage, so they are willing to bid it up.
  9. hi silk ... I know you are too bright a trader to think this right ?

    -Is nat gas just another commodity bubble created by greenspan easy money.-