Thursday, July 17, 2008
Natural Gas Collapses
Heating Oil down below $3.80.
There's no telling how far this can go, because coal, NG & oil all moved up together. No doubt the energy traders will be hoping for volatility on the down side. We'll call this the second horseman of the energy trader's apocalypse.
Also, any thoughts on the long-term nat gas supply situation?
Also, today was the last day on some of these contracts.
Do you want to define long-term? Is that 2009 or 20 years?
Here is the natural gas weekly update. A quote:
Cooling degree-days were 7 percent above normal levels on average in the Lower 48 States, exceeding normal levels in the New England, Middle Atlantic, East South Central, Mountain, and Pacific Census Divisions. However temperatures in the key gas consuming areas of the other four Census Divisions were below normal. These other regions include the major consuming markets of the Midwest, Texas, Louisiana, and Florida, among others. The less-than-normal demand for cooling-load purposes likely contributed to the above average storage injection.
Also mentioned are Bush's action in lifting the executive off-shore drilling ban. Of course everything in this report covers movements before today's action.
I'm sure some hope this is just a bump, and then it's going back to pump, but the bottom line is that somebody's got to buy at these prices.
We've been in a tight supply situation given the reduction of imports from Canada. The gas rig count since January, given the plays they were involved in pointed to a drop in gas prices about 3-4 months ago.
Short term (2-3 years) gas will be back at $5-6. Then LNG importation starts kicking in hard and it needs to. Without access to the Rockies (and an economic issue in Alaska) the lower 48 will be short gas very soon. Especially with all of the power conversions from coal and oil to gas.
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