i think we all agree the severity of this energy downturn is deep with a worldwide slowdown, factories shutting down etc.. has destroyed oil and now nat gas. question is, i believe nat gas hasnt a chance to move higher only lower until oil recovers and the economy recovers. so where does nat gas bottom and for how long? im afraid years.... just my worthless opinion.
the problem currently has to do with the credit scam. The price you have to pay for natural gas is also dependent on how much money there is in the system since: "Deflation is a contraction in the volume of money and credit relative to available goods".
So many factors involved in the price of nat. gas. With the 2 trillion of newly printed money not entering the market and only money leaving via margin calls and redemptions we could see the price move down even if demand is good.
I also entered too early thinking nat. gas will be the future transportation fuel. But clearly if all the debt is paid off and therefor all the money leaves the system prices go down. The system is just wrong. Many material about the FED system. It is just not right. They steal the peoples money bu charging interest over money they create out of nothing. The blow up the credit supply and then they take the credit away.
If not an investor in UNG this might look good because the prices are going down. But the smaller companies are going bankrupt this way and the fall into the hands of the crooked bankers. And the people paid for these companies by buying their stock. When the companies go bankrupt the stock goes to 0$ and the assets fall into the hands of the banks. It is a very dirty system we have and nobody seems to do anything about it.
This is how these crooked bankers operate. The create cycles of credit expansion followed by credit contraction. They blame the people for being too greedy. But behind the scenes they create the game.
It will go up when all of you give up on it going up. That's the way those ass---holes who work on Wall Street run things. I would personally prefer a few public executions for the bad apples in the lot. They can ruin peoples lives in a worse way than drugs, but all they get is a slap on the hand.
gsx has never had a profitable quarter. Their G&aA is not shareholder friendly. It will go up sometime, but it won't be due to fundamentals. Trade it around their presentation schedules and promotions.
I wouldn't count on the OPECkers to push up the price of oil. They are a bunch of cheating dirtbags who will say they are cutting and just keep selling oil to bring in money for their Rolls Royces, palaces and hookers.
That's why oil dropped to under $10 per barrel in late 90's and it could again. We dropped $110 per barrel in 6 months-another $20-$25 will be easy with the crashing world economy.
Their cost of production is $2-3 per barrel, so they still make money at $10.
$10 crude means $1.33 NG at 7.5 to 1.
I was totally bullish thinking the same as you that we will go up very fast very soon. But Friday's tank BELOW the low with all the bullish news out there is VERY bearish.
The price and charts never lie. If we don't start up next week and roll over to new lows, that means those in the know know OPEC is cheating a lot, the world economy is worse off that everyone thinks and demand will plummet along with the price of oil and NG.
NG producers could get in a cash crunch if the price goes too low and flood the market with supply to bring in anything they can to survive.
Been hearing from fringe sources (not you RJ sorry) that this slowdown will be worse than the great depression regardless of how much worthless cash the central banks put out there. I see more and more signs that they may be right.
I am now a super cautious bull who will dive head first into the bear cave if we don't turn soon-especially if broad markets roll over. That means dumping my long position and shorting UNG and DIG on any bounces that continue to fail.
In 2006, average production costs (or “lifting” costs, the cost to bring a barrel of oil to the surface) ranged from about $4 per barrel (excluding taxes) in Africa to about $8.30 per barrel in Canada; the average for the U.S. was $6.83/barrel (an increase of 23% over the $5.56/barrel cost in 2005). Besides the direct costs associated with removing the oil from the ground, substantial costs are incurred to explore for and develop oil fields (called “finding” costs), and these also vary substantially by region. Averaged over 2004, 2005 and 2006, finding costs ranged from about $5.26/barrel in the Middle East1 to $63.71/barrel for U.S.
two issues with your thoughts:
charts lie all the time and most especially during high volatility
opec doesn't produce natural gas, so they will not factor into any ralley in ng sparked by demand.
it comes down to supply and demand for a particular commodity and ng is about to decouple from oil just as oil did from ng.
oil isn't going anywhere any time soon, but nat gas could move up significantly if the US rig count continues to decline at this rate and the weather stays below average.
UNG has some more to fall. My TA tells me around 20.7 is the next target by Dec 29th-Jan5th timeframe. It should also be the last of the legs down. This corresponds to a low of about 5.1-5.2 on $natgas I believe. Lets see how things pan out.
we should be getting news on the idea that natural gas will start replacing oil for transportation. There is a lot of evidence you can find googling the net. This should trigger a bottom in the price of natural gas.
see for instance:
but many evidence can be found and this is especially important for the USA.
It does trade with oil, a study done by Rice University shows it trades on average around 7.5-1. And rite now it is exactly 7.5-1 for the current contracts. So yes, it may not decouple unless there are signs of lower supply, getting below the 5 year average usually triggers an uptrend. I do not think it will take years or a year. I'm actually looking for natty to start bouncing next week like it always does. The next two draws should put natty under the 5 year average raising supply concerns. And RJ if it doesn't turn next week OPEC has arranged another meeting for Jan. 19th. There will be covering leading to the meeting and if they surprise cut then oil can bottom. If they don't cut there they have a meeting scheduled in March. These guys need this money more than you know, they are counting on this money for infrastructure projects ect. Heck look at Dubai, all that building going on, oil will bounce shortly I gaurantee it, they will do everything in their power to do so. Their even trying to get Russia a member of OPEC. One of the trades on Wall Street now is buying as much oil as you can and storing it on a tanker for future use and or profits, why, because its dirt cheap and the futures contracts are selling for around $60 barrel, contango happening as I type. So not years, but more like days, weeks, maybe a month or two. PS. If the dollars heads back down where it was months ago and makes a double bottom which could easily happen with the amount of dollars coming off the press and Trichet talking about not cutting rates for awhile you will be glad you own a commodity. Obamas infrastructure plan will demand a ton of oil/gas/copper/concrete/steel/iron ore ect. It not years buddy, its definately right around the corner.
Natty is already trading at a discount to the oil futures contracts, for example the June oil contracts closed Friday at 50.05 divide that by 7.5 and the June natty contract should be trading around 6.67. But its not, it closed Friday at 5.71. So the way I see it in June after 3 OPEC meetings, which will all be huge cuts gauranteed, Obamas infrastructure plan underway, and billion of stimulous in the system I'm thinking that natty is going to play catch up with oil. Actually all the natty futures are trading at a discount to oil.