clapton re: Nat Gas Short Trade
Futures were the short trade.
But, even with the - 40% one month collapse sub $9, I think Nat Gas has a good chance of seeing $5/$6 if the Iran/Nuke story doesn't take Crude significantly higher and pull Nat Gas with it.
If the Iran story doesn't explode (literally) then I think there's a great short opp in the Nat Gas E&P's like KWK being created...I'd just keep "stops" in place relative to the Iran situation taking a negative turn.
We just had a massive fundamental "discrepancy between price & risk" develop in Nat Gas...this time it was on the short side.
From the Department of Energy's Web Site:
tonto.eia.doe.gov
[Natural Gas: "Stocks were 59 Bcf higher than last year at this time and 361 Bcf above the 5-year average of 2,214 Bcf."]
Inventorys are 361 Bcf above Five Year Average Inventory Levels -- even after a once in a hundred year dual-direct hit from Hurricaines Rita & Katrina
Enron showed us nearly 5 years ago with their criminal manipulation of the Natural Gas markets that led to the California blackouts...just how easy it is to manipulate commodity markets.
Rampant speculation by any other name -- is still.....rampant speculation.
When you have Investment Banks that have created the largest derivative positions in the history of the Energy Markets -- and have their fingers in everything from Storage to Tankers...it really isn't hard to turn speculation into an Enron-esque manipulation.
But, even when speculators completely control a market...occassionally they get over confident, over-zealous and over-extended....when a few decide to cut & run ... that creates a stampede heading for the door and violent price corrections soon follow.
Natural Gas cratering -40% in a month may seem to be an excessive correction to the bulls -- but not when you look at those inventory levels.
I'll patiently continue to pick my spots shorting energy.
Goldman has just signaled yet another "student body left" call to for Hot Money to return to Crude and given the geopolitic's of Iran... they certainly now have a posterchild "sizzle" in which to sell (and hype) the (Oil) steak.
Iran may save Matt Simmons and his Peak Oil BS from being run out of town on a sharp stick after he & his now famous Red-Bulbous Nose appeared on CNBC during the aftermath of the 2nd Hurricaine and proclaimed that this was quote/unquote: "going to be worse than Peal Harbor" -- as far as a hit on the US Economy...and re-hyped his supply:demand driven super-shock price spike thesis.
Simmons months earlier had promised that we would finally see a Peak Oil supply:demand driven super-shock in Oil Prices by Q4 2005 at the latest.
The key being - "supply:demand" driven.
Oil Tankers were recently stacking up in the Gulf of Mexico unable to unload their Crude Oil into Houston -- because storage facilities were bloated to the rim with crude oil and were unable to physically handle any offloads and Oil & Gas supplies and inventory levels remain at, or above 5 year norms.
Nothing even remotely close to a quote/unquote "supply:demand" driven super shock.
A speculation shock - yes... a supply:demand shock ? - No.
Speculation by any other name -- remains speculation.
But, neither the Oil Bulls, nor the Oil and Natural Gas market need a fundamentally driven supply:demand super shock... look at the inventory levels...they don't need anything fundamental, or even based in reality... all they need is an Enron, or a Goldman....and a few Hedge Funds to follow their lead.
There are lots of ways to make money...
Personally, I prefer to be able to sleep with a clear conscious when doing so. If we had a harsh winter in the Natural Gas dependant Midwest this year... we would have had a human tragedy... even with this mild winter you have poor working families & the elderly on fixed incomes having to choose between food and heat. GM & Ford were riding the wave of strong SUV sales... until speculation in the Energy Markets has now rocked gasoline prices -- which have cratered their SUV-weighted product lines and now GM may be on the brink of bankruptcy and tens of thousands of jobs in the Airlines, Transportation & Auto Industry are at risk because of rising energy prices.
Greenspan created a massive misallocation of capital that created the boom & bust in Internet & Tech stocks...we're now seeing one being created in Commodities.
In March 2000 at Nasdaq 5132 -- few if any, imagined that Nasdaq 1108 soon awaited by October 2002.
History & the Markets have shown a propensity for correcting both the misallocation of capital and rampant speculation.
Enron once thought they had the "smartest guys in the room" ... now maybe it's the Energy Derivatives Group at Goldman ?
Matt Simmons has become a political pimp for Peak Oil and the $200 Billion we're spending in Iraq - that could have completely paid for the entire infrastructure build out for the Canadian Oil sands and created North American Energy Independance (versus MidEast Oil dependance) and an Economic Boom for both Canada & the US...but, that's not what The Council on Foreign Relations, Bush/Cheney, James Baker, the Saudi's, or Big Oil want...
Not everyone in the Oil Business is buying the "Peak Oil BS" -- there is a reason Exxon is patiently sitting on that massive Cash hoarde.
Pick your spots.
...all in due time.
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