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To: Frank who wrote (71041)	8/16/2000 5:46:20 PM
From: Now Shes Blonde	Respond to of 95453

For those of you who may be interested, this "talk" between 2 NG futures traders on the direction of NG prices and why. I find it interesting, if you don't, sorry for the noise. As usual, 99.99% of my post is cut and past; this taken from a NG futures trading email list. Post 1: OK! Let's talk books! As the proud owner of the Oct-Jan spread, I'm thinking to myself, "I'm golden because this spread wins either way." Obviously, I have accumulated them for the reason (among others) that I humbly believe that all of the supply shortage hype is bullshit, a subject about which I know a lot (the bullshit part). On the other hand, suppose I'm wrong. If it is not bullshit, the problem is not in September and October, eh? It is in January and February. So, if this market does believe it's own bullshit, than can someone in this enlightend group axplain to me why JAN and FEB are trading at 12-15 cent premiums to the front, instead of at $5.00? Hmmmmmm........ Response to pos 1: Scott asks, "why Jan and Feb are trading at 12-15 cent premiums to the front, instead of $5.00?....." The answer, I am told by utility buyers is, "We can't justify paying $4.55 for Dec natural gas in the calendar month of August "at this point in time" (apologies to the Watergate hearings...) to our PUCs..." This means that, if the NWS comes out in mid to late Oct and says, "Uh...gonna be a normal winter", then the utilities can JUSTIFY paying more for NG at that time. If the NWS comes out and says, "Uh..ain't gonn be no winter (like last year), price drops and utility buyers look like members of Mensa. (Note: I missed getting admitted to Mensa by just one point! They said, "point is, Rando, you're just not smart enough!") Badda-bing! But I digress... Reason # 2: The quants of the industry won't allow their trade staff to sell the fronts and buy the backs untill the volatility drops at the front of the curve and rises at the back (winter) part of the curve. Sep volatility is higher than Dec or Jan volatility. Simple math then dictates "buy the front, sell the back." Thus, members of the Storage Trading Tribe" got voted off the Island of Gaseousness" last April, never to be seen this year. So, IMHO, there is no political or economical reason to pay up for winter gas until Old Person Winter shows up and causes your tongue to stick to the flagpole in front of the Natural Gas Trader's Hall of Fame. At least, that's what will be said in the Senate Hearings on the Winter of '00-'01 next summer. ********************** EDIT My hope is for an earlier then normal cold snap to throw a wrench into the system. If that happens I hope these guys will be thinking a colder than normal winter is coming.