Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: RockyBalboa who wrote (22791)	9/20/2009 4:10:23 PM
From: Larry S.	1 Recommendation Read Replies (1) \| Respond to of 71456

Agreed but WDIK. In any event, you might find this week's Baron's Commodities corner interesting. Larry Gas Prices Burn Fitfully By JASON WOMACK Traders betting against more strength in natural-gas prices may get caught out. DJ-AIG Commodity Indexes WIDE SWINGS IN NATURAL-GAS PRICES ARE providing big opportunities to investors who can stomach the ride. Earlier this month, Nymex natural-gas prices reached a 7½-year low -- plunging to $2.409 a million British thermal units, down more than 80% from last summer's highs above $13/MMBtu. Prices faced pressure from rising storage levels, soaring domestic production, and tepid demand for the fuel resulting from weak economic activity and mild seasonal weather. Many traders remained pessimistic about prices for too long, however. The October natural-gas contract settled Friday at $3.778 per MMBtu, up 27.6% on the week, after violent price swings. "We stretched as far as we could and, like the rubber band, it snaps back," says Tim Evans, an analyst with Citi Futures Perspective in New York. Natural-gas futures jumped as traders who had bet on falling prices stepped up their short-covering. Helter-skelter price movements aren't unusual in the spring and the fall, as traders deal with seasonal demand shifts. But the recent market chaos underscores how difficult it is to gauge the effects of recession and a gas glut. Storage levels, which stand 16.7% above last year's, are on pace to rise to record highs -- or even test capacity -- before the winter heating season begins. The U.S. Energy Information Administration projects that storage levels will rise to 3.840 trillion cubic feet, near the estimated peak storage of 3.889 trillion cubic feet, by the end of the summer-injection season, when natural-gas supplies are replenished to meet winter demand. [dj] Meanwhile, wide price spreads are also giving traders financial incentives to buy gas, stow it, and sell later at a profit. October gas futures are trading significantly lower than contracts even a few months into the future. "If you've got the storage, there is plenty of reason to buy right now," says Stephen Schork, editor of the energy-advisory newsletter the Schork Report. And uncertainty still remains about whether an early cold snap or economic recovery will revitalize demand or a storm threat will disrupt supplies. "I don't know how you take a big bet here; the ability to get whipsawed is pretty severe," says David Pursell, an analyst with the Houston-based investment bank Tudor Pickering Holt. Nevertheless, investors are drawn to this volatility. United States Natural Gas Fund (ticker: UNG) will resume issuing new shares starting Sept. 28. UNG and other exchange-traded funds sell shares and then use the money to buy futures contracts. Commodity ETFs have grown enormously over the last three years, with UNG seeing particularly rapid growth in 2009. On Aug. 12, citing fears that regulators would limit energy trading, UNG said it would suspend new-share issuance. Some traders have lost billions on natural gas. In 2006, Amaranth Advisors collapsed after losing $6 billion on wrong-way bets in this rough-and-tumble market. JUICED: ICE FUTURES U.S. November contract frozen concentrated orange juice rallied 15.7% on the week, to $1.0365 a pound, on smaller-crop forecasts.