hdrjr,
I missed FCS, but a lot of my tech's were up 15-20% today. If they got up over 20%, at least half were sold. Overall I was up 8.9% today and 15% in the last two days, but still down for the year.
We have a long way to go in the tech recovery. Way to much excess capacity, that will take years to work through the system. The tech wreck is comparable to the oil collapse in 1980, which took 10 years to correct. I suspect it will be a lot shorter in the tech sector, but still years not quarters.
The NG story is still in place. I suspect we will see $10.00 spikes this winter, and rising NG prices this summer. My guess is 2001 will be the peak for annualized NG prices, which will start declining in sometime in 2002.
Gas supply has continued to decline over the last four years. Domestic supply was down around 3% last year, but is expected to reverse the trend this year due to higher prices.
Gas demand is driven by electric generation, which represents over 80% of new gas demand. As a result of higher prices, residential and commercial demand are down about 2%, industrial demand is down about 4% and power generation is up about 5%. Overall net net, demand is expect to increase about 2.5% per year over the next several years.
Increased power generation for at least the next several years is already locked in. Capacity additions in 2001 and 2002 are expected to be about 45,000 MW and 35,000 MW. This compares with 12,000 MW in 1999, and 20,000 MW in 2000.
Most here are starting to believe prices will stabilize long term in the $3.00-3.50 range. I'm not sure I buy into that yet. Their reasoning is tied to the marginal cost of new gas supplies. Average cost for LNG is about $2.80, Alaskan gas will cost about $3.20 and deep water gas costs an average of about $2.95 just to produce and transport(no profit). In addition as NG prices fall below $4.00, NG demand lost to fertilizer shut downs, reduced NGL production, fuel switching and conservation start to reverse.
The flaw in their thinking is most of these project are long term projects which will not be stopped when supply exceed demand. NG price will fall below $2.00, and the cycle will start all over again as is has done over and over from day one.
If oil prices hold (a big if), we should get the final leg up in OS and E & P stocks. NG prices should be accelerating this fall due to the usual speculation caused by the coming winter and hurricane season along with the continued low storage (which will be with us for the next two years). This fall (late August early September), will be the best (and most likely last) time to sell all of your OS and E & P stocks. I suspect this will be the final leg up until the next cycle starts in about 3-4 years from now.
If oil prices don't hold, all bets are off. Despite the fact that domestic cash flows are more driven by NG prices, stock prices are more driven by oil prices.
Sorry for the long post. I solved the high power bills last summer by buying a high efficiency Train A/C unit, and drilled my own water well to reduce the high summer water bills.
Hope you are doing well down under.
Take care,
Jim |
