Reasons to be Bearish on NG

Discussion in 'Energy Futures' started by bobbymak880, Aug 16, 2011.

  1. 1. Temperatures moderating across the US for the next month.
    2. No tropical storms on the way; looks like another calm late summer.
    3. Demand down - Consumers and business are still in "cutting back" mode; doing more with less and all that sort of stuff.
    4. Industrial needs lower - Most economists are now predicting a double dip since the GDP has been stuck in 'stall speed'
    5. Anti-Fracking groups are getting more aggressive. In NYC (Manhattan) a woman was soliciting donations and signatures against Fracking in the Catskills on SATURDAY!!! Not a weekday, a saturday! Clearly, she's either being paid or she believes in the cause. Perhaps both. Whatever the case, she, and others are misinformed on fracking.
    6. Obama has NOT made a strong statement in favor of NG! (It seems the mis-informed anti-fracking interests clearly have hold of both his ears.)

    So, am I off the mark here?
    Should I go long or short?

    : o Bobby m.
     
  2. Bob111

    Bob111

    i don't think that there is a lot of downside in NG. what's their profit margin? imo the spread between NG and CL is pretty big and NG can move the cars just fine w\o any huge modifications. we use to have a fleet of cars running on LP in Russia back in 80's-90's. no problems whatsoever. dunno why it take so long in USA to make the switch. same for diesel,instead of experimenting with pathetic\useless hybrids. give us more options.

    http://alternativefuels.about.com/od/propan1/a/propaneconvert.htm
     
  3. I don't see a lot of downside in NG either. But stranger things have happened in the NG market.

    A few thoroughly-publicizied fracking mishaps have ignited the passions of environmentalists against the entire NG industry. Ughh.

    There was a time when the green movement was solidly behind NG. That support seems to have evaporated.
     
  4. Bob111

    Bob111

    hey..the more regulations\limitations=less supply-> price up
    looks like NG forming a solid base. remind me gold back in 90's-early 2000
     
  5. gtor514

    gtor514

    I won't argue with points 1- 4, but points 5 and 6 could be considered bullish for NG if true. If fracking is limited it will shut down alot of suppliers and reduce supply and inventory.

    All in all, I think the market is way to saturated with small time drillers flooding the market where there is not enough demand and inadequate infrastructure to get it where it is most needed. Long or short, there's better places to put your money.
     
  6. bone

    bone ET Sponsor

    http://fuelfix.com/blog/2011/08/24/usgs-boosts-amount-of-marcellus-gas-reserves/

    "A new assessment of the Marcellus Shale says the Northeastern U.S. formation may contain 84 trillion cubic feet of undiscovered, recoverable natural gas, far more than believed less than a decade ago.

    The new assessment by the U.S. Geological Survey updates a 2002 study of the gas-rich formation that stretches though New York, Pennsylvania, Ohio and West Virginia, which concluded the region had about 2 trillion cubic feet of recoverable gas."
     
  7. auspiv

    auspiv

    This is just the USGS. I was under the impression that it was widely believed the Marcellus had right around 80-100 TSCF of gas for the past few years.
     
  8. bone

    bone ET Sponsor

    I am by far and away not an NG specialist - for me, it is a spread vehicle to trade power heat rates.
     
  9. pwrtrdr

    pwrtrdr

    Run the correlation, its great until its not.


    Using Tailgate gas when basis blows say in Northeast for some unknown reasong, power can become uncorrelated and risk or VAR out window, and most of the heat rate guys hiding in the weeds get blown out,,,,,, picking up dimes in front of dozer scam...

    but its accepted hedge.....lot of shops like it because they can explain the theory and measure the past etc...... until....
     
    #10     Aug 26, 2011