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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: Olaf Koch who started this subject4/26/2001 11:16:19 AM
From: tommycanuck  Read Replies (1) of 95453
 
FWIW Had a long discussion yesterday with a guy that markets about 3/4 of a billion cubic feet per day regarding what is coming in the way of pricing going forward. He stated that he is still fully levered to the spot market and expects to stay that way going forward. He expects choppy pricing until the cooling season begins in earnest. The provision of hydroelectric power has been severely hampered by the low water levels. It seems that in addition to the lack of rainfall and runoff to replenish water supply that the utilities were stealing "winter water" to meet the increase in demand for California over the winter.
He was surprised by the way industrial demand disappeared over the winter and commented that it has set up the potential to get back to normal levels of storage over the summer, provided that we get continued slackening in demand. He is, however, operating on the assumption that the cooling demand will be less elastic than the industrial demand and sees the price firming over the summer. He maintains that the cards are starting to fall into to place for the crisis to start spreading, if the demands side does not provide the slack to address storage concerns. Does not see LNG as an immediate help but will be part of the longer terms solution. Move to gear up deeper drilling capacity and new exploration areas will begin to show support for supply by next year at this time.

Good to see the spillover from the surge in the OSX into the Canadian stocks today! Media starting to take notice of conciliatory Canadian stance toward US and lack of threat in regard to duties or increased taxation of the industry.

Regards

TC
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