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

To: tradingfaster123 who wrote (121713)	6/18/2009 5:30:47 PM
From: Ed Ajootian	8 Recommendations Read Replies (3) \| Respond to of 206342

tf123, I continue to be amazed at how well natty prices are holding up in light of exceedingly bearish data. Right on cue (good call), the storage in the producing region is now higher than last year's peak, and only 89 BCF away from the all-time peak. At the current pace of fills for that region the all-time high for that region should get taken out in about 4 weeks, a point that is only a bit beyond the half-way point of storage fill season (as measured by taking the 5-year average season fill divided by 2). Its now virtually a sure bet that we will have forced curtailments in the producing region, possibly for an extended period, starting this summer and extending to the end of fill season (late Oct.). Regarding the articles harping on the the fact that the current oil/gas ratio is way over the usual, I can't get to the point where I follow the logic that this relationship should necessary come back in line, at least for the near term or intermediate term. The bottom line is that although these are both different kinds of petroleum, their primary uses are totally different --- oil is used primarily for transportation and gas (natty) is used for industrial purposes and space heating/cooling. Granted, there is a small overlap in the case of residual fuel oil vs. natty but that is just a miniscule degree of overlap. In any event, given that resid is trading way over the price of natty, the fact that these 2 fuels are interchangeable (for some users) is irrelevant. Granted, over the long term, one would think that the markets will start to find more and more ways to substitute natty for crude oil given the huge discrepancy in btu-equivalent costs of the 2 fuels, but as we know these sorts of changes don't happen overnight.