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

To: Ed Ajootian who wrote (121782)	6/18/2009 7:44:50 PM
From: tradingfaster123	1 Recommendation Respond to of 206343

I agree with everything you said, Ed. NG is holding up so well in the face of storage injections one would think would send prices decisively lower. Frankly, if I knew the injections were going to come in like this I would never have gotten out of the short positions when I did. But seeing the current price action, in hindsight, I'm glad I did get out. Which is not to say NG shorts wont ultimately pay off in a big way. If everything plays out on the current storage trajectory and we get sub-$3 prices, there will be a big pay day. But I don't have the stomach for that. The move down from $13 to $3.50 was pretty smooth, but breaking the $3 area is taking way longer than I would have thought several months ago. I'm guessing the storage buying is now in full force with end users not concerned about paying some extra now to ensure maximum inventories heading into winter, given the winter strip above $6 and uncertainty about how fast production will fall later this year. I read there's also been a few hundred bcf of added storage capacity over last year and this year; it could be this storage is more flexible and able to arbitrage the wide contango. One publication I read from PIRA estimates maximum capacity around 3900. Once we get to the point of congestion, with no takeaway capacity or space to store in certain areas, then surely the floor comes out from under. Like in the Rockies, where prices have been in the $2's this whole injection season practically. More regions should eventually become constrained like that. I guess the price action is telling us we're not there yet for Henry Hub or other areas in the producing region. It's definitely surprising that we're only 89 bcf from the all-time peak in the producing region, yet the price is showing no real concern. But I guess if we use some random wild guess number like 200bcf more space left, and if injections come down as heat builds to an average rate of 20bcf/week, then that's still another 10 weeks or so. But 20bcf/week may be way too aggressive. In 2007, the next 13 weeks had an average injection of 7.5/bcf. In fact, it took from about now until October 23-- practically the end of injection season-- to fill another 200bcf into the producing region. Interestingly, 2005, 2006, 2007, and 2008 all had more than one withdrawal in the producing region sometime during the summer. Which is not to say we're going to draw this year necessarily, but it illustrates the point that producing region injections tend to fall off hard in July and August. And all of the above was under the assumption of 200bcf left in producing region storage. Maybe it's 300bcf left, or maybe it's less. A lot of unknowns. It is possible that congestion that really collapses the price under $3 doesn't show up until the very back end of injection season. That still leaves a lot of time for volatility as we move into the peak of summer and the beginning of hurricane season. Good summary on the oil/ng argument.

To: Ed Ajootian who wrote (121782)	6/18/2009 9:32:32 PM
From: quehubo	3 Recommendations Read Replies (1) \| Respond to of 206343

How many weeks before Canadian storage is full and their exports head south? I think there is wreck waiting to happen at the end of this tunnel the ng hopeful are riding through. Will there be favorable weather to start the heating season and a return better S/D balance. At least if you have normal draws over the Winter the hope is that production and demand will work in a bullish direction. Or will the overhang in storage, plus bottled up present production, plus surging shale production and increasing LNG run head into weak industrial demand?

To: Ed Ajootian who wrote (121782)	6/19/2009 6:35:40 AM
From: John Carragher	Respond to of 206343

another thought is cracking ,refinery can only make so much gasoline, diesel etc from the barrel the rest falls out to heating oil. Conversions of heating oil or heavier industrial oil for heating to ng should bring pricing pressure on heating oil this winter. unless ng is restricted because of size of distribution lines this could continue to shrink refinery margins. i would love to convert my home to ng from propane but told the ng line outside our development is not large enough to supply the area.