I find it very difficult to say this is going higher even with the extremely low inventories. We may see another pop due to the next snowstorm Monday and a couple of days of cold, but warm weather is on its way and there is no stopping it. In all likelihood we will have a cool summer, because #1 - soil moisture in eastern US is very high and cooler spring will retain this moisture, #2 the great lakes climate effect due to higher water levels and ice pack that will take until June to melt. We are also not going to run out of NG and most investors understand this, there is a cap on the prices for a couple of years yet. If we have another cool summer, hurricanes will be out of the question. I wonder if South America has came out of their drought yet, I had heard that that is what caused the lack of hurricanes last year. Not sure. I am presently short, but did consider repositioning myself yesterday afternoon (sell my DGAZ to buy lower next week), but convinced myself that the run was not going to be that significant. Could be wrong, wouldn't be the first time. Good day and good luck!
I was basking in my shorts with no shirt on along the ohio river last week! It was on the verge of hot in Kentucky! 100 max.
Chicago? How about farther south, south of the ohio river has been balmy, had my windows open in Kentucky this weekend. There is quite a cutoff to the cold - snowline basically and the withdrawals will be minimal at best for the rest of the year. Actually above normal in Atlanta this week. I agree Chicago and the north east will be cold, but to get big withdrawals we need the Southeast and texas to be involved or you will have to divide your withdrawal number by 2 for a realistic picture!
dude, 2003 was a millennia ago to nat gas fracking. All they have to do is turn on the spigots! This deal is temporary, will see $4 gas again and will be this year.
Ladies and Gentlemen,
Just got finished reviewing last years and prior years withdrawals from this point on to the injection season, we will be extremely lucky for this to drop below 1 tcf. If we have the exact same withdrawals as last year we will be right at the 1tcf level (that was an extraordinary year!). I am not impressed, and believe this price could collapse if any of the prior 10 year march withdrawals or lower happens which is highly likely. We have had injects for many of the weeks in March in the past, and in general the last two weeks reports in march in history was withdrawals less that 10bcf. This is now an emotional trade driven by media hype, and reality is fixen to hit. I would sell this position and remain neutral for another week or two and ready myself for a short position. Prices will continue to be elevated to a degree, but you can forget $6 sustained prices for NG. We could possibly see a gain to seven dollars in the next week, but get ready to sell. There will be no more polar vortex this summer, and this winter was unusual for the past 5 years but normal in the 1970 to 1990s. I promise you will survive!
Hey, I was down 65% on UGAZ most of the summer and finally sold out for a ten percent gain before this last run up. I am currently down on DGAZ and to say this will never go up is ridiculous. It will not continuously go down forever. You must remember that contango is your friend. You will see 5 to 7 again. Look at all historical charts on NG. During all supply crunches the price skyrockets and always - I repeat always - goes back down and generally is oversold. In 6 months or less you will recover your losses unless you are in over $10. With the great lakes frozen probably until June, we will in all likelihood have a cool summer. You will have compounding effects that will rectify the volatility problem we have had recently. Don't get caught up in the panic! Emotions will kill you!
dude, nat gas was at $6.4 already (yesterday), and DGAZ was priced at 2.92? You are way off on your numbers!
I would not be buying this position now until the momentum shifts, people have been making cash on the big swings, but that is over. There was a clear double top scenario, and the cold will be breaking down in the weeks to come. One national forecaster has stated "significant" warming for the next 30 days and could possibly extend into spring. He also said a pattern change that he has not seen in 30 years, which I thought was odd (Dubuque, Iowa weather underground, scientific discussion). To be honest, would not be surprised to see injections in the month of march. I believe this is a good short scenario to around $4.00 natgas. I would short Monday pre-market or any brief surges in price of natgas. My trade sucked, entered dgaz during volatile period in upper 4s and volatility killed my trade. I think in the next couple of weeks will see dgaz in the 5 to mid 6 range.
Friends, I have tracked this fund for an extensive amount of time. There was little decay vs. UGAZ over the period of a year. What is killing this funds' share price is volatility, and I personally think they need to use a different system in calculating share prices. If the price of natural gas drops from say 5.5 to 3.5 consistently each day at 2.5%, and we start with a price of say 3.3 for DGAZ which would increase in value at 7.5% per day correlating. We would have a compounded price for DGAZ, when NAT is at $3.5, of around 11.9 per share. If you drop the percent move for nat gas, the price will be higher, if you increase the move for nat gas the price will be lower. Try a highly volatile period of say 10% where nat gas goes up 10%, then down 10%, then up then down at exactly ten percent then you will clearly see the problem. If the moves are larger like we have been seeing of, say 25%, the shareholders are being raped. I clearly see the next time we have a highly volatile period, I will sit on the fence because my timing sucks!
All right guys and gals, we are having 4 days of temperatures of 10 degrees above average. Whoopty doo. After that the temperatures are forecasted to be average to below average for the extended and beyond as the national weather forecaster says in Chicago. Don't see any extended warmup on the horizon for anyone in the Midwest and east. This deal is way oversold. After this coming Thursday the inventory levels will be below and outside of the range of historic levels, which is to say "historically low." Given that the supply due to fracking is only increasing 1.7% year over year we cannot overcome the shortage in supply quickly. This should translate into higher prices eventually until the draw season is over. We can sustain very warm temperatures for a couple of weeks and still be at record low levels of supply. I find the price action very interesting, and could be potentially an excellent time to buy. One or two more record withdrawals could seriously damage our supply level, and one must remember that winter only started 3 weeks ago. This could get pretty scary if a extended cold snap comes in late Jan and early Feb.
I have been perplexed at the reasoning of the drop of nat gas prices as of late. We are entering a period of weather that has not been seen in 20+ years in the consuming region. A week or two of normal or above normal temps will not make up 15 to 40 degrees below normal with strong winds. Our inventory levels will be below 1 trillion cubic feet by april which has only occurred a couple of times in the past ten years if we just have normal temperatures for the rest of the year. If you compare the temps for next week to the week we had a withdrawal of -295, their is no comparison. This will be a record withdrawal. What will happen if we have another two or three weeks of record cold in late January or early Febuary? We could be in a serious crisis, and this should be priced in at this point as far as I am concerned. I am frustrated at the weather forecasters, since they have been consistently wrong beginning with the hurricane season, and so called warm November, then the so called warmup in late December, and now the so called warm in the beginning of January. The complete opposite has occurred every time. I would be leary of a large warmup late next week with a huge snowpack and low sun angles at this time of year. If it occurs, it will be short lived. I am bullish at this point, but seem to be the only one and realize my opinion does not count. The trend is your friend whether you agree or not.