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

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To: 1coolpiglet who wrote (90528)	9/25/2007 8:38:09 AM
From: Ed Ajootian	Read Replies (1) of 206133

1cool, regarding natty prices being under the btu-equivalent of residual fuel oil ("RFO") prices, I found the graph at page 6 of the September GA Energy Brief particularly helpful, see that report at gafunds.com. As shown, if natty prices stay in accordance with the current futures strip, this would be the first time in this millennium that the December & January futures prices closed below the price of RFO. Also, the discount of natty to the price of RFO is presently the highest its ever been in this millennium. The btu-equivalent price of RFO is currently around $9.30/mcf. I'm not suggesting that natty will go that high, but it seems that if RFO is now acting as a ceiling of sorts to the natty price, we still have a lot of room to run before we hit that ceiling. Regarding your figure of 1.5 bcfd for the additional demand for natty when it is under the btu-equivalent price of RFO during heating season, for any given week, is this flat irrespective of heating demand or does it go up commensurate with the degree of cold weather?

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