Natural Gas

[winston]

I dont follow Nat Gas that closely.

Again applying my 80 / 20 rule, when something has drop 80%, it normally time to look at it. The "expert" analysts will tell you why it can drop to 95% but at that time, you should actually be alert for the rebound..

When something has dropped a lot, it will go out and look for excuses to go the other way eg. short covering, weather, new demand, supply disruption etc..

[kennynah]

Sounds like there is no more reason to go up anymore.

But Natural gas has, winter is coming

supposing this is a rhetorical fact, that come winter months, demand for natural gas will rise, possibly leading to higher prices.

if so, even the least intelligent would start loading up natural gas (commodities and related derivatives)...but from whom would they be buying from? let me rephrase, if you had started accumulating natural gas assets now given the conjecture that Nat Gas prices will rise soon, would you sell during this period?

and if you, him, her, they, them continue to not sell, then perhaps Nat Gas price will indeed rise, at least theoretically....but only theoretically, bcos there would exist no sellers to any transactions to take place....

do i make sense here?

[lithium]

Seller of natural gas will continue to sell gas because they need cash flow. When you are doing business, you cannot stop business for a month or tell you customers to buy from others.

[lithium]

Natural gas is showing a "V" peace

[kennynah]

i see you mean the producers....who will continue to hedge their production costs and profits...and i suppose you mean power supply companies who will continue to sell refined nat gas to homes....

perhaps i might be wrong....but i doubt they trade Nat Gas.... just like our butchers in wet market dont trade in live hogs, even when they sell pork every single day.... the people who trade Nat Gas are not always physical holders of the goods... the people who trade Nat Gas and most other commodities are traders who neither take delivery nor sell the physical Nat Gases, short of the producers...

nevertheless, i wish you every success in your trade in Nat Gas

[lithium]

Yeap, traders who do not physically hold Nat Gas like myself are flocking in.

That's why CFTC is trying to limit these traders. They are worried what you mentioned will happen. No one wants to sell natural gas on winter unless they get a huge margin out of it.

I will trade it until end of Oct. Then I will switch my fund back to my favourite HK stocks.

[winston]

Stats of the week: 58%

Gain in the price of natural gas (nearest contract month) off its lows set early this month.

Source: Daily Wealth

[winston]

These Commodity Stocks Are on the Brink of Disaster By Tom Dyson

Investors in natural gas stocks have lost their minds. They're about to lose their wallets, too...

There's a major wipeout coming in the natural gas business. North America has too many natural gas producers. The industry needs a major cleaning out. The most inefficient, high-cost producers must fold. This will bring supply and demand back into balance.

Low prices are the market's mechanism for culling the weak players. Four weeks ago, natural gas prices hit a seven-year low of $2.50 per thousand cubic feet. But so far, nothing's happened. No player wants to cut production when they've invested so much money developing it. "Getting $3 is better than nothing," they think. "Better to pump out more now before it falls even farther."

In the last four weeks, gas has jumped above $4 and is closing in on $5. With higher prices, production is growing. According to industry researcher Baker Hughes, the number of rigs drilling for natural gas in the United States has gained in nine of the last 10 weeks. Meanwhile, the oversupply of gas is so great, we've almost run out of room to store it.

The Energy Information Administration says U.S. natural gas inventories rose again last week. They are now a just a chip shot from the record high hit in November 2007. Natural gas storage in producing regions – including Texas, Louisiana, and Oklahoma – already reached a record high last month.

Aubrey McClendon, CEO of Chesapeake Energy, the largest independent gas producer in America, figures America's natural gas industry will fill up all available storage by the end of the year. There'll be "involuntary curtailments," he says.

This chart compares UNG, the exchange-traded fund (ETF) for natural gas (in black), with XNG, the AMEX index of natural gas producers (in blue). XNG is an index of natural gas producers like Chesapeake, Devon, Anadarko, and Apache.

In the last two years, the price of natural gas has fallen almost 70%, yet natural gas stocks are still trading at almost the same prices. In other words, investors in natural gas stocks have totally ignored the huge collapse in natural gas prices.

And get this...

This chart shows the AMEX oil producer index (in black) cast against the AMEX natural gas producer index (in blue). The AMEX oil producer index contains names like ConocoPhillips, Chevron, and Hess.

Natural gas stocks have thrashed oil stocks over the last nine months, even though the price of oil gained 60% over this time, while the price of natural gas lost 13%.

The guillotine is about to fall on natural gas production. And I can't see any reason for this strength in natural gas stocks. My only conclusion: Investors in natural gas stocks are living in la-la land. The dream ends when storage runs out or gas prices fall back down again.

Aggressive traders should immediately short high-cost, speculative natural gas stocks. Conservative investors should wait for the storm to pass. They'll be able to pick up the highest-quality producers at bargain prices. I expect some of these companies will be paying 20%-30% dividend yields in the aftermath.

I'll let you know when the time comes...

Source: Daily Wealth

[lithium]

Place some orders tonight. Stop loss at Nov Future $4.50, wish me luck guys

[iam802]

GOOD LUCK!!