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Gold/Mining/Energy : Big Dog's Boom Boom Room

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To: excardog who wrote (6613)	2/12/2002 2:03:55 AM
From: schrodingers_cat	Read Replies (1) of 206209

I was looking through some EIA data the other day and what struck me was that reality was the opposite of predictions for 2001. This time last year people were predicting soaring NG demand for summer 01 due to all the new power plants under construction. What actually happened was that industrial and electric utility demand dropped sharply in 01, wiping out about 1TCF of demand compared to the previous year.That is why the storage filled up. By comparison residential and commercial (ie heating) demand held up very well. I think industrial and commercial demand are highly price and economy sensitive, and residential and commercial demand are weather sensitive. With NG prices way down, that 1 TCF of lost demand may come back. If NG prices were to hit 1.50, we would discover how elastic demand is in the other direction. Bottom line is that I think the market will give up on NG this spring, since there will be record breaking storage levels. By late summer, it will be apparent that fill rates are sluggish and that maybe we won't hit full storage. Winter 02/03 might turn into a replay of winter 2000/1 if cold, otherwise we have to wait until 03 until prices get interesting again.

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