303. SOARING NATURAL GAS INVENTORIES
Gas Prices Tumble to Near One-Year Low
Natural Gas Prices Decline to Their Lowest Level in Almost a Year Amid Soaring Inventories
WASHINGTON (AP) -- Natural gas futures declined to their lowest level in almost a year on Friday amid soaring inventories of the mostly domestic fuel used to heat homes and produce electricity.
Analysts said the price of natural gas could fall even further in the months ahead, given relatively weak demand and expectations of rising supplies, though they cautioned that production in the Gulf of Mexico remains hindered by damage from last year's powerful hurricanes Katrina and Rita.
"Unless we have a repeat of last summer's hurricane season, we're going to have so much (natural) gas in storage by September that we won't have anywhere to put it," said Daniel Lippe of Petral Worldwide Consulting in Houston.Source
-- by JD
posted by JD @ 11:56 PM
16 comments
16 Comments:
Wow!
That will help me heat my house this summer!
JD, you doing exactly what you accuse the doomers of doing! Trawling the newsfeeds for any snippets that appear to favor your argument. Don't be tempted to play their game, your blog is better than that.
Do we assume that you agree with these predictions?
Forecasts call for a long hot summer this year, with the concommitant demand on electricity (which "clean, modern" NG is used to produce increasingly). So things might not be as rosy as painted in this article.
Also, much of the good news is not in production going forward, but in storage currently filled, due to the very warm winter this year (yeah, global warming, what a crock!). Check out the storage graph for North American NG.
The fact remains that rig counts are through the roof, but production is not. If the spot price comes down and NG producer stocks fall, consider it a good buying opportunity, because North American NG is only going to become more dear.
fernando said...
Do we assume that you agree with these predictions?
Do you mean me or JD? And never assume anything!!!
This type of "news" is just media chatter, it doesn't merit close analysis, which is like the point JD has made elsewhere* (and I agree with).
All this media/analyst blathering amounts to is "if supply stays high then prices will go down unless something affects supply, in which case prices will go up". That is not prediction, it's just stating the bleeding obvious!
If it helps to analyze the analyst's "prediction", forecasters are predicting another bad year for hurricanes, and I have absolutely no reason to say they are wrong.
* On peakoil.com, in his 'retirement' thread "suckling at the tit of media hype which nourishes you with reassuring messages". Great quote!
Paul,
"The fact remains that rig counts are through the roof, but production is not"
A stupid question here...
If I was a Natural Gas producer and demand was going down and there was huge amount of gas in storage, why would I produce more? Who would use it? If there was no market for it, where would it go if storage tanks get full?
freak,
just shut in the wells, if you think you'll get a better price for it in the not-too-distant future. Of course, that doesn't help storing it as LNG.
Did you also know that commodity markets are about ready to crash?!
"Merrill Lynch recently compared the surge in the prices of commodities such as copper, which are traded on investment exchanges, with the likes of steel or rubber, where it is much harder to take a position through the financial markets, and concluded that the level of speculative interest was 'unprecedented'.
That seems to be the case in copper, and certainly is the case in oil. The price of crude always drops as we come out of winter because consumption in the US is significantly lower in the summer months. Not this year though, despite there being more than enough production to meet current demand."
The prices are just unsustainable.
Nowhere to go but down.
Really.
No, really!!!
bc,
now on a serios note - bought a put about a month ago on DAX, figured we were about at the top, but you know how that is with the timing.
Now it's downhill (doubt there will be new highs, though short "recoveries" are certain) at least til first of Oktober. Do you think we'll recover after that? (the famous fifth leg)
If you dug that book, I'd suggest doing more research on Amory Lovins and his writings regarding PO. He's one of the few old-guard minds who seems to actually be using some rational hope in his outlook, as opposed to the death-to-the-next-generation rhetoric.
Freak said...
"Would I be wrong to assume that it is increasingly harder to store natural gas as temperatures increase through the summer"
Yes you would.
In the USA natural gas is stored in geological trap structures which are not affected by above ground temperatures.
So, I think JP Morgan said it best..."prices will fluctuate".
ng train said: "To answer the question why a producer would continue to produce if prices were forecasted to be higher in the future, well the marginal cost per mmbtu of gas is very low. In some parts of the country it is as low as $2.50. "expensive" gas is around $5, so it still pays to pump every last MMbtu.'
So ng_train... are you saying that producers are producing every last bit of gas that they can right now and that they always do? Is production the same every month?
It sounds like you are saying that as long as gas stays above $2.50, producers will produce as much as possible, even if demand drops. huh? So even though demand is = let's say a qty of 50, they will keep producing 100 if they can. Is that what you are saying?
LOL. They're going to need a bigger boat, if that's the case.
Some great NG numbers available from EIA. In particular the big table of "marketed production" (the stuff actually sold) is interesting.
^^I agree with the poster above,everytime the energy prices drop
the sheeple feel smug again and continue their non-thinking consumer lifestyles,and all the cliched activities that go along with it like dirtbike riding,jetsking,powerboating etc,etc,not to mention 150 mile round trips to their Mcjobs.
Bring on the $100+ a barrel oil and soon!!
Post a Comment
<< Home