Dennis, as CS says its gonna take some more time for the rig count to come down. Also, most of the announced cap ex cutbacks have been for '09, not '08. Lastly, if what happened in Canada recently is any clue, there will be a fairly significant lag between the point where rig counts come down and the point where production decreases. So the production will come down, but I wouldn't hold my breathe waiting for it to.
BTW, that latest CS piece refers to another note they put out last week called "A Look at Producer Financial Health and Liquidity”. Could you share that one with us also, thanks kindly in advance.
I believe if December is much colder than normal it would create enough demand to soak up all this extra supply coming on, and should bring natty prices back up somewhat. A cold December is much more helpful than, say, a cold February, since the LDC's have the whole balance of the winter to worry about. Not sure what the latest December forecasts are, but at least it looks like November is going to end on a cold note at this point.
I'm actually starting to feel better about natty than crude at this point. Natty's price has been nearly as volatile as oil when you look at the daily swings, but when you look at the last 3 months or so, natty's price has been more stable. The near-month Nymex contract averaged $7.49 for Sept, $6.73 for Oct., and through 11/13 it averaged $6.83. Quite a difference from oil, which averaged $104, $77, and $63, for Sept, Oct., and through 11/13, respectively. |
