John Pitera's Market Laboratory Message Board

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Strategies & Market Trends : John Pitera's Market Laboratory

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To: GROUND ZERO™ who wrote (2356)	6/23/2000 1:51:00 PM
From: John Pitera	Read Replies (4) of 33421

GZ, it looks like NG is up to it's 1996 all time high, but the july contract has an ascending triangle look to it so it possible we may blow through 4.600 next week. commoditiesfutures.com how does the chart look to you? I do know when any commodity starts making new all time highs prices can run much higher than anyone can imagine. we should get chip's read of the chart since he has been deemed to have propensities in the energy complex -g- From SSB....._______ Thursday June 22, 2000 Summary July natural gas prices continued on the relentless drive higher. July pushed to a new contract high of 4590. Although a 4600 print was posted, which would tie the all-time high for a spot contract, it was later removed. Prices did remain strong all day and finished at 4551, up 173 ticks. The 12-month strip also rose to a new all-time high. The 12-month strip jumped over a dime to settle at 4274. Expect volatility to remain very high. Today witnessed another range of almost 20 cents. This market continues to be driven by a tight supply/demand balance. The inventory build of only 64 bcf was again the lowest on record for this week. The problem appears to be a combination of solid demand with flat to declining production. The production problem stems from the increasing production decline rates. The latest decline rates are over 26%. That means that over 13 Bcf/d of gas must be replaced each year just to maintain level production. With many recent discoveries smaller in nature, it is proving difficult to replace existing production. We think the rig count must continue to increase before a real production increase is observed. That again leads to a bullish overall stance. The winter contracts continue to be undervalued in relation to the rest of the market. With an advance of almost 50 cents since Monday, some pullback is anticipated. However, consider selling this only on spread basis and only for the most aggressive of accounts. We would look to sell July 2000 or August 2000 against the December 2000 if that spread moves to flat. The December contract currently holds a 69 tick premium to July. CLOSING PRICES NYMEX OPEN HIGH LOW SETTLE CHANGE July 4430 4590 4395 4551 +173 August 4410 4560 4385 4513 +144 September 4410 4530 4385 4493 +139 October 4380 4530 4360 4473 +136 November 4480 4620 4450 4543 +130 December 4560 4670 4550 4620 +120 12-Month Strip 4274 +116 -------------------------------------------

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