As for XTEX/XTXI price for the short-term, I don't claim to know. This could be a short correction and the whole market bounces back in a week or two. Or it could be the start of another big crash that takes us half-way back to March 2009 lows (I find it hard to imagine that MLPs would revisit the March 2009 lows unless credit markets totally freeze up again). In that case, even Crosstex could easily drop 30% from here. At the moment, I'm thinking the former (short correction) is more likely, but I wouldn't bet the ranch on it. Now is a time to be cautious. We may be in for much better opportunities in the months ahead. So get off margin if you have any. Now is not the time to be over-leveraged. It does appear that more people are now questioning whether the economy is going to be weaker than expected in 2010 with more people calling for a double dip. Watch tomorrow's unemployment numbers but also keep in mind that employment is a lagging indicator.
Personally for me, since most of my portfolio are MLPs and royalty trusts which are still paying distributions (and starting to increase distributions in the last couple of months), best scenario would be if distributions hold steady or increase but unit prices keep dropping during 2010. That would allow me to buy more units when I reinvest my distributions. While seeing portfolio value increase is nice, if you are reinvesting distributions then temporarily lower unit prices will be more profitable in the long run.
"Guess you win today Lisa"
Anyway, this comment shows you are missing my whole point, even though I've been saying the same thing for about the last 2 months.
I have never been predicting day to day stock price movements. All my comments on this subject have been about NG gas outlook for rest of 2010 and particularly the period toward the end on the next injection season. So we are talking around September timeframe. You can't say I'm right or wrong till then because I'm not predicting very short term.
And for you guys who dispute me, think about it. Back in Sep/Oct we were hitting capacity limits in some parts of the storage network. As of today we have 9% higher inventories than at the same time last year. As capacity hasn't suddenly grown a lot, for us not to reach capacity again in Q3 2010, we need at least one of two things to happen. Either
a) much less production than last year, and/or
b) much higher demand than 2009
If you look at the rig counts for Canada and U.S. combined you will see that they are back approaching 52 week highs. Check this website tomorrow for updated numbers. Within a couple of weeks I think you will see rigs counts higher than last year (Canada and U.S. combined)
Furthermore, a higher percentage of the rigs now are higher producing horizontal rigs. Finally there are a lot of completed but capped wells ready to come on line.
On the basis of all of this, I don't see production being much less than last year. If anything, I think 2010 production will be higher than 2009.
As for demand, who is predicting a huge increase in demand? That would need a strong economic recovery since the biggest user of gas is industrial. Switching large numbers of vehicles to run on NG would help but that won't happen this year. And from what I've read there are actually a lot of electrical generators preparing to switch from NG back to coal since NG became more expensive since the price ran up. I don't see a strong increase in demand in 2010. More likely is a double dip recession than a very strong economic recovery. Most likely demand will be somewhat similar to 2009.
In the absence of reduced production or increased demand what is going to do it? Remember that inventories are already 9% higher than last year and winter is more than half over. And don't tell me hurricanes.
So, cubicle, you claim you are always right about gas inventories. Please explain how we are going to avoid being even more oversupplied than last year by September timeframe. Is it going to be due to greatly reduced production or greatly increased demand and give us your reasoning.
Finally, if we do get in the same 'close to capacity' situation, don't make the mistake that NG price will not get crushed again. Once there is no place to put the gas, spot price will tank because the alternative is for producers just to flare the gas. Even selling for pennies is better than that. So spot price will crash. And if there is no storage available they cannot do arbitrage by buying spot and selling futures because for that you need to be able to store the gas. This isn't oil where you can put it on a tanker in the ocean. So futures prices will follow the spot lower. I figure it will go down at least to $4 by August/September timeframe with a possibility to revisit the $2-3 range like in 2009. Do you realize there have been years not too long ago where the price went below $1? That's when you start to see producers all going BK.
Am I short? I have disclosed many times that I am long XTEX (basis around $6) and no position in XTXI.
But I had been hoping for a pullback this week or next because I have MLP distribution money coming on 2/12 which I will re-invest (not buying more XTEX at this time though). So a pullback now comes at the best possible time for income investors who reinvest distributions.
Lisa I usally agree with post but ng is not going to continue to trade on the fact how much is stored.
It will turn on how far down the road can we get the tech going for the turn coming in switching from coal to ng.
I say a year or three and I bet that is why the big boys have become players.
I think if we see anything below 6 I will buy everthing I can afford.JMO
Remember the WF analyst 1-year price targets posted a month or so ago...
You all pooh-poohed at the time but not looking so unlikely any more, huh?
Certainly looks more likely than your predictions for $40.