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Strategies & Market Trends : John Pitera's Market Laboratory

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To: Jon Koplik who wrote (7211)	10/5/2005 12:48:46 PM
From: John Pitera	Read Replies (1) of 33421

Hi Jon, This article could show why the 14.00 - 15.00 area,, may be a resistance zone for Natural Gas prices since 2.5 bcf of demand could switch to distillate fuel oil above $14.00 per mil BTU's.... also industry analyst Cooper (who is a bright guy) comments about a 2 bcf delta (or imbalance) between supply and demand. Prices are gravitate to the Margin of Supply and Demand. (I think it also reflects the Marginal Rate of substitution.) ----------- from the same article..... "If you lose 100 bcf of supply and 102 bcf of demand, that's bearish," says Cooper, who believes the market is overly fixated with how much production has been lost. Price spikes notwithstanding, there's some evidence that the demand response would be even stronger if gas prices were to keep rising, effectively placing a ceiling on further gains. Denhardt says that about 2.5 bcf of demand a day could switch to distillate fuel oil at prices above $14 per million BTUs. If oil prices ease, this ceiling would come down correspondingly.

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