SA article on rig count implications for 2013 supply
author: Richart Zeits
title: Natural Gas: Will 2013 Goldilocks Turn Into A Bear?
Summary (first paragraph):
"The sheer magnitude of the decline in the U.S. gas-directed rig count since 2010 may overshadow the fact that in the past several months the E&P industry has been quietly putting rigs back to work in some of the key dry gas plays. The uptick may have gone little noticed in the depth of broader rig statistics (which also coincided with the holiday recess). While the net increase in the total gas-directed rig count at this point is modest, the step up in dry gas drilling - which is amplified by very high short-term production yields per well - is large enough to make a meaningful, on the margin, contribution to what increasingly appears to be an over-supplied market going into 2013. The development is somewhat worrisome given that it is taking place so early in the inventory cycle. If the trend shows further momentum, the implications for natural gas prices - and the popular United States Natural Gas Fund (UNG) - would be increasingly bearish."
Repeat: I respect your posts since they are thoughtful and provide significance. But this article is two weeks old and the remainder of the article hedges this by putting it into historical perspective. And it was of course published in seeking alpha. My question is this: is your investment thesis for natty purely short? if so, why?
Maybe that's an unfair question. But for now I'm bullish on natty long term. Which is an easy thesis since, in the words of Shakespeare, "it's all in the timing." Short term I feel the natty market is broken. Usually a market is broken due to poor information.