Peak B.S. Nat Gas Inventories now at ALL TIME HIGHS....
Whodathunkit?
We were spoon fed that Natural Gas had even tighter supply:demand dynamics than Crude Oil.
Post the dual direct hit of hurricanes Rita & Katrina, Council on Foreign Relations -- Peak Oil Front Man -- Matt Simmons said that the coming Natural Gas crisis and cooresponding price spike would be quote:unquote:
["...an economic hit to the US economy, worse than Pearl Harbor."]
On cue, the speculators & momentum players ran Natural Gas prices thru the roof...but, the true contrarians (and reality bulls) patiently waited:
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Message 21746438
Sept. 28, 2005
["Relative Patience... I'm getting an eeriely familar Deja-Vu all over again feeling about Natural Gas - in comparison to the environment that existed at the end of 2000 - into early 2001 during the California Blackout Crisis ... the last time Nat Gas went parabolic....and I made a bundle shorting it.
When, not if... I truly believe (hell, I feel it in my bones already) that there is going to be a Portfolio Weighted Short-Trade in Natural Gas developing for me once again...
..Timewise...the ultimate Cyclical Top to me looks to be potentially playing out seasonally just as the 2000/2001 Bubble did.... with a mid-heating season/late December potential peak.
Patience... when, not if - Going 'SHORT' NATURAL GAS will be a HUGE Winner.... H-U-G-E."]
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And "short" Natural Gas -- was a huge winner:
stockcharts.com[l,a]dbclynay[d20051211,20060211][pf][iut][J69380818,Y]&listnum=2&listNum=2
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HERE'S A REALITY-CHECK UPDATE ON NAT GAS
ogj.com
MARKET WATCH
Natural gas futures price hits 15-month low
Sam Fletcher
Senior Writer
HOUSTON, May 19 -- The front-month futures contract for natural gas fell May 18 to the lowest price in 15 months on the New York market as US storage continued to surge.
The June natural gas contract dipped just below $6/MMbtu on the New York Mercantile exchange, closing at $5.997/MMbtu, down 13.2¢ for the day, after trading at $5.86-6.14/MMbtu during that session.
The Energy Information Administration reported the injection of 91 bcf of natural gas into US underground storage in the week ended May 12. US gas storage now stands at 2.08 tcf, the highest level ever for this time of year (OGJ Online, May 18, 2006).
"The recent pattern of injections suggests large builds through the remainder of May and June," said analysts at Enerfax Daily. That "virtually guarantees" a "massive storage overflow condition" before the end of the injection season in the fall, "forcing steep discounts in the cash market," the analysts said.
"While gas in storage at the beginning of the heating season has never exceeded 3.4 tcf, there is much more room for excess volumes, up to 4 tcf," said Enerfax analysts. "However, given the steep contango of futures into the coming winter of about $5/MMbtu, an owner of storage could buy spot gas and sell January futures, locking in an annualized return of well over 100%. The fact that this arbitrage opportunity hasn't been exploited more is a sign of how limited storage capacity is outside of what has already been allocated to utilities."
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Is this a "normal" price correction -- or, is this a SPECULATIVE BUBBLE !?!?!?
stockcharts.com
That's a near -70% correction in less than 6 months....and yes, that was a rhetorical question for anyone living in reality vs. a bubble.
Nat Gas was the first commodity to get massive speculative inflows and it was the first to collapse...
Now, the the rest of the commodity complex, especially the metals are undergoing significant corrections.
A note on Crude Oil:
Crude Oil is a special case, given the "Geopolitical Weapon of Mass Economic Destruction" nature of Oil.
Crude will be the last to fall...but, fall it will.
That eventuality will begin to become priced in as the market begins to price in a significant political change in the coming 2008 U.S. Presidential Election...if not sooner, should the House, or Senate change hands to the Democrats in the November elections.
Massive Paradigm Shifts are now occuring politically in the USA.
George W. Bush who did nothing for border security as either the Govenor of Texas, or in his first 6 years as the U.S. President...suddenly did a "180" on border security...
The Old Guard within the Republican Party is seizing control and making changes...
The greatest threat to the Bush Big Oil -- Cowboy Cartel is not the Democrats, but rather Old Guard Republicans.
Speculators will all be racing toward a very narrow exit (as they already are in many commodities) as ripples in the pond begin to reflect the coming paradigm shift.
Hedge Funds & Speculators have ignored Bernanke as if he was a piece of abandoned roadkill on a lonely stretch of Texas highway.
Not only are they not giving him any respect, they are literally ignoring him and the Fed as a moderating force to this runaway speculation in the market.
Imho, we've reached a very enticing inflection point relative the discrepancy between price & risk in this market and the Fed becoming strongly hawkish on inflation and even perhaps throwing in a .50bp message to the speculators.
Nearsightedness is one of the deadly sins for speculators.
The signs of a slowing US economy have appeared on the horizon and that is the greatest threat to popping the market bubble.
Those initial signs were first ignored by speculators, but now we've seen the initial reaction to that threat in this present correction in commodities.
Additionally, we've reached a key turning point in the runaway US Deficits. Speculators were also caught shortsighted to this fact that has now appeared on the horizon...
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http://www.treasury.gov/press/releases/js4275.htm
The numbers don't lie: With lower tax rates and higher growth, the federal government ran a monthly budget surplus of $118.85 billion last month, with tax receipts at all-time highs. In fact, government receipts are now close to their historic average of about 18% of GDP and are projected to rise above it.
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Of late, it's been "TOO EASY." Any time it get's -- "too easy"...you can be guaranteed that Mr. Market is going the "lock you up" with a slow, change-up curve ball on the outside corner of the plate.
...and that's just what happened to speculators in commodities.
They got lazy, they got complacent, they got over-confident, THEY GOT GREEDY and they got a lesson relative GREED -- from Mr. Market.
This was a great time to have ignored your "greed glands" and to have paid yourself by ringing the cash register and safely securing profits in the bank.
Natural Resource traders had better shift their focus off onto the horizon, because change is rapidly appearing in those ripples on the pond.
-- changes in the US Deficits.
-- changes in US Tax Revenue.
-- coming changes to spending, border security, foreign policy, energy policy, US Dollar policty...and a new U.S. President in 2008.
There is only 18 months and counting until the November, 2008 U.S. Presidential Election...ignore the massive change that this will bring to the markets -- at your own peril.
Goldbugs had better take a long, hard look at that Natural Gas chart, because not only are there many lessons to be learned, but it may just also be a very prescient window into their future as well...
tic` toc'
SliderOnTheBlack |
