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To: 1coolpiglet who wrote (90528)	9/16/2007 6:55:42 AM
From: Ed Ajootian	Respond to of 206133

1cool, thanks for your thoughts. I had been wondering what effect the price of natty being under RFO would have. Over the long term this would seem to act as a floor to the price of natty. The current relative winter futures strips for US & UK would suggest that any spot LNG would go to the UK vs. US, all other things being equal. But if US natty prices were to go much over $9 and UK prices stayed where the current strip is, the LNG would come here. So this would seem to make $10 natty somewhat unlikely, other than for very short periods, unless its a cold winter in both countries.

To: 1coolpiglet who wrote (90528)	9/25/2007 8:38:09 AM
From: Ed Ajootian	Read Replies (1) \| Respond to 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?