Thursday's report will be a seminal one. For the first time in a long time, natural gas in storage will be below the 5-year average. Will that be the market's wake-up call that natural gas is priced too low? Will the algo/momentum traders all jump on nat gas at once, spiking the price a dollar or two? The nat gas market seems amazingly calm. Given the disappearance of excess inventory and dramatic curtailment in nat gas drilling, I'd say the market's complacency is unfounded.
Karen--I agree with you. I do not know what it will take or what form the catalyst will be, but it won't (IMO) go on forever. Too much stimulus money (QE infinity), too few rigs (below 500), more end users, inventory dropping...NG is like the unwanted redheaded, lefthanded, ugly stepchild of commodities. But every dog will have its day! (Just a matter of when and what will send it up)--Tug (a former redhead)
Are you saying all the shifted demand in electricity generation will just flow back to coal? You've got utilities who are being forced to become cleaner and burning nat gas is a lot cheaper than retrofitting a dirty coal plant. Some demand may shift back, but most can't or won't. Also, you have more use coming from residential, transportation, and industrial that will offset any switching back. Even if demand stays flat this year, with production down 5% and no more excess inventory, there's going to be an enormous hole to plug this year. We burned an extra 900 BCF last year. 5% less production as predicted by the companies (or more) is a decrease of 1.2 TCF. 2+ TCF is a big hole to fill, and $4 gas ain't gonna do it.