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

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To: Dennis Roth who wrote (97453)	2/29/2008 7:41:20 PM
From: Ed Ajootian	Read Replies (1) of 206212

From today's Bloomberg piece: "Supplies may end the cold-weather demand season near 1.25 trillion cubic feet, a typical level, said Charlie Sanchez, vice president of energy markets for Gelber & Associates in Houston. ``Assuming those fundamentals have a price, you couldn't justify a $9-plus price. The fair-market value is somewhere around $8.25,'' he said." Charlie is really missing the boat here. First of all 1.25 TCF is not really that typical, it is at least 100 BCF below the 4 year average (I don't use the 5 year average because '03 was an aberation). Secondly, if in fact we get down to 1.25 TCF this would be lower than the storage level in '05, and in '05 the ratio of natty prices to oil prices was a lot higher than it is today. If we see 1.25 TCF as the low I believe the market will take natty prices into double digits.

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