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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: jim_p who wrote (38446)	1/14/2005 3:18:19 PM
From: Sweet Ol	Read Replies (1) \| Respond to of 206326

Jim_P, I agree with every last thing you said in that post. The only disagreement I have with you is the timing of when the energy cycle will turn over. Most of the charts I look at suggest we are starting the 5th wave up. That makes me think there is more price appreciation to come. Having said that, the 5th wave is a fickle and unreliable rascal. Sometimes it overshoots and sometimes it undereshoots. I think it will probably undershoot. My best guess scenario is that when the general market craters, and it looks very suspicious right now, that the hot money will run to energy which is going to make good money for some time. This will inflate the P/E multiples and be the driving force for the 5th wave. No question, we are skating on thin ice. It is going to be tricky to play the end game to the cycle. We all need to be on the lookout and Jim is probably the canary in the mine. JMHO, subject to change without notice! Best to all, JRH

To: jim_p who wrote (38446)	1/14/2005 3:43:45 PM
From: quehubo	Read Replies (1) \| Respond to of 206326

Investors who have primarily focused on storage levels to determine supply and demand (risk reward in sector) have lost their asses over the last year. Having 300 bcf of "extra storage" for the last six months is not a clear indication of increased production. Looking at what price is paid to put and retain that 300 bcf into storage supports another conclusion. The production reports from Lehman cite 50%+ of NA NG production from quarterly reports. We do have very good data on rig counts through LRN and the relationship between the public and private companies drilling history does not support any suggestion that the private E&P's are even covering the decreases in production from the public companies let along provide a net increase for NA. The Lehman data indicates a 1.4 bcfpd decrease in supply in 2005 from 2004. This totals 511 bcf for the year, so ending with a few hundred bcf more in storage on 4/1 still means there will be a tough battle in 2005 to fill storage. The extended futures strip does not lie. The pipeline operators, storage operators and many E&P's see the relationship between supply and demand up front. Including supply from Mom & Pops. My understanding is that there is substantial price sensitive demand waiting under $6. Anyway I can turn on a dime here again, but the recent draws give me great comfort that supply and demand are balanced at these prices for now.