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EV Energy Partners LP Message Board

  • dinkdestroyer dinkdestroyer Aug 12, 2009 4:57 PM Flag

    Natural Gas Prices

    There is a threat of a nearterm price drop because of a record inventory accumulation(up to early November). This might force shutins in certain producing areas with prices dropping under $3 basis the nearby futures. After the middle of November, the wind should be at our back because production IS DROPPING by about 500 Million/Cubic Feet/day per month. Once storage withdrawal begin we should see above normal withdrawals with avergae weather this winter. Next year the storage overhang should disappear and prices will recover to acceptable levels. If you look at the natural gas futures curve you will see prices get substantially better and so this may bring investors into these production MLPs. I trade NG futures and I predict there will be a good seasonal rally probably about the time November futures go spot, at that time this investment should begin to show some good relative performance to the S&P 500. The uncertainty over a potential short-term price debachle will probably make this investment lackluster for awhile.

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    • Thanks for your input. It helps to have someone who understands the NG market. I am having a difficult time resisting EVEP's yield (given their hedges and strong performance) but since the next distribution is not until Nov, I feel it's better to wait and watch this slide in NG. Maybe I get a better buying opportunity.

      Anybody for shorting UNG?

      • 1 Reply to marklibera
      • well it will probably be weak for the next 45 days but there are already many shorts in this market. If you short it, I would have some calls to limit my loss when the inevitable rally/shortcovering up move comes. I view the downside as limited from the low $3 area, so it would be best not to short it here.
        Todays EIA report was actually constructive but the market sold off hard anyway. Until we get to November 1, its going to be very soft baring some big increase in Hurricane activity which could spook the shorts. Bottom line is, be carefull about being short without some options to cap your loss.

    • Thanks, I was wondering why it dropped so fast the last hour on high volume.

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