For a minute there I thought I had to get off my couch, when all the while the fact is we don't have to do anything much but keep things afloat for just a few decades more! In fact, we'd best shut up about PO, because if our offspring finds out we knew about it all along, they'll turn and wring our necks come 2036!
Posted: Thu Jul 24, 2008 9:33 am Post subject: The Natural Gas Price Watch Thread
I don't know if anybody else has been following the price movements of natural gas futures, but I'm just floored by how far they fallen and how fast this month. On July 2nd, August contract futures traded for a high of 13.75. Shortly after that, it started falling and has fallen pretty much uninterrupted since then. Yesterday it hit the 200 day moving average at 9.75, which I thought would be the bottom. Today it rocketed on through like it wasn't even there. Already today its gotten down as low as $8.97. I thought I'd start this thread for tracking and discussion of natural gas prices. So discuss. What's going on here? How low will this thing go? _________________ "I was born in a deep forest
I wish I could live here all my life
I am made from stones and roots
My home, these woods and roads
All my life I loved this sound
Of the woods all around
Eagles fly where the winds blow free" -Korpiklaani
Posted: Thu Jul 24, 2008 10:22 am Post subject: Re: The Natural Gas Price Watch Thread
Very curious indeed. Unlike oil, I see very little to indicate "demand destruction" in natural gas.
Looking at the EIA numbers, I see that natural gas for home heating demands haven't changed much at all since Nixon. Really surprising when there are 100 million more people today... though I guess American growth has been much stronger in the Sunbelt. And commercial (fertilizer plants?) demand has been down. But, electric company draws for natural gas have been up 5%+ per year for over a decade. Overall demand is slowly growing and production is at best flat.
Long term, I could believe that the Alaska pipeline will bring more supply online, or that a nuclear/wind renaissance might reduce nat. gas demand for electricity. But, I don't see a fundamental reason for the price drop (or the price increase). Is there some connection to the oil market (given enough BTU cost differential, people will substitute CNG cars and buses)? _________________ At 1% annual growth, human bodies will incorporate every gram in the observable universe in approximately 10,170 years.
Joined: Mar 07, 2007 Posts: 320 Location: Holland, United Kingdom (of the seven Netherlands)
Posted: Thu Jul 24, 2008 11:10 am Post subject: Re: The Natural Gas Price Watch Thread
lawnchair wrote:
Is there some connection to the oil market (given enough BTU cost differential, people will substitute CNG cars and buses)?
CNG is indeed a cheaper subsitute for oil, but there is no short-term connection. Car conversion is slow and there are still few OEM NGVs available in North-America.
There is also a market connection for other applications: people who don't use NG for heating yet may decide to choose NG over heating oil or propane. Also for some diesel gen sets NG can be a substitute.
Joined: Dec 18, 2004 Posts: 4114 Location: One Mile From the Columbia River
Posted: Thu Jul 24, 2008 12:36 pm Post subject: Re: The Natural Gas Price Watch Thread
Tyler_JC wrote:
Here's my guess:
1. Natural gas tends to follow crude oil. Oil has fallen 15% in the past 10 days.
2. Hurricane Dolly didn't destroy much in terms of natural gas wells so the fear premium disappeared.
3. Natural gas is the fuel of choice for peak load power. If economic activity drops, electrical demand drops.
That last 2% of electricity might be, say, 50% natural gas whereas the grid as a whole is only 20% gas.
If we aren't using that last bit of electricity, we are saving a lot of gas.
Thanks Tyler.
#'s 2 and 3 are a good non-technical clarification and reminder for us as we try to decipher the reasons for the high degree of volatility in the natgas market.
A quick comment on #1. Natural gas does tend to follow 'fairly' close to oil. With that said, we'll see natural gas climbing right back up as we pass through this current dip in oil prices. Dips like this are a common feature, and will be exaggerated more and more as we proceed past the peak in oil production.
Have patience. This dip will pass in time and we'll test $20.00 much as we'll no doubt test oil at $200.00 over the coming months. _________________ Everything is Impermanent. Shakyamuni Buddha
Joined: Sep 19, 2007 Posts: 1090 Location: Land of the Tongva tribe
Posted: Thu Jul 24, 2008 1:20 pm Post subject: Re: The Natural Gas Price Watch Thread
I still can't figure out why people think nat gas is "suppose" to follow oil.
Oil is a worldwide commodity and nat gas is a domestic commodity for the US.
So I don't see the relation btw oil and nat gas and not a subsitute for oil.
I am bullish long-term on nat gas because of the huge amount of nat gas it takes to produce the tar sands, oil shales, etc... in Canada and the US.
Anyways .... all it takes is a really hot summer then a really cold winter back to back to raise nat gas prices in a big way.
joeltrout _________________ ENERGY is the basis of our industrial civilization and sustains our standard of living. It is the foundation stone of our national wealth. A nation starved of energy.....will be a nation of starving people.
Joined: Feb 20, 2005 Posts: 2677 Location: Uppsala, Sweden
Posted: Thu Jul 24, 2008 4:03 pm Post subject: Re: The Natural Gas Price Watch Thread
lawnchair wrote:
Overall demand is slowly growing and production is at best flat.
Production has been flat for 10 years but is up 9 % this year. High prices have spurred new production. _________________ Peak oil is not an energy crisis. It is a liquid fuel crisis.
Joined: Feb 20, 2005 Posts: 2677 Location: Uppsala, Sweden
Posted: Thu Jul 24, 2008 4:04 pm Post subject: Re: The Natural Gas Price Watch Thread
Twilight wrote:
Tyler_JC wrote:
3. Natural gas is the fuel of choice for peak load power. If economic activity drops, electrical demand drops.
It is also the fuel of choice for high grade heat. Maybe chemical and metalworking industry demand is being affected. It would be something to check for anyone interested.
Electricty is also a fuel of choice for high - and low - grade heat. _________________ Peak oil is not an energy crisis. It is a liquid fuel crisis.
Joined: Feb 20, 2005 Posts: 2677 Location: Uppsala, Sweden
Posted: Thu Jul 24, 2008 4:05 pm Post subject: Re: The Natural Gas Price Watch Thread
joeltrout wrote:
So I don't see the relation btw oil and nat gas and not a subsitute for oil.
Nat gas is a direct substitute for oil. On the very short term in peaking plants and factories, on a little longer term in heating and transportation. _________________ Peak oil is not an energy crisis. It is a liquid fuel crisis.
Joined: Sep 19, 2007 Posts: 1090 Location: Land of the Tongva tribe
Posted: Thu Jul 24, 2008 4:25 pm Post subject: Re: The Natural Gas Price Watch Thread
Starvid wrote:
Nat gas is a direct substitute for oil. On the very short term in peaking plants and factories,
I don't know much about factories or power plants so correct me if I am wrong but factories and/or plants don't run off crude oil. Don't they use power from nat gas generators, coal fire power plants, nuclear power plants, etc...
Starvid wrote:
on a little longer term in heating and transportation.
I think the "little longer term" phrase is meant to be several years if not more than a decade out. Most of the country uses nat gas already for heating and cooling. The NE is the primary user of fuel oil and until they get the pipelines built it will be years before people can switch.
Also there are very, very, very few nat gas vehicles. They are even fewer nat gas filling stations. That is at least a decade away from taking much of an impact from oil consumption in terms of gas or diesel.
Please correct me if I am wrong.
joeltrout _________________ ENERGY is the basis of our industrial civilization and sustains our standard of living. It is the foundation stone of our national wealth. A nation starved of energy.....will be a nation of starving people.
Posted: Thu Jul 24, 2008 8:21 pm Post subject: Re: The Natural Gas Price Watch Thread
joeltrout wrote:
I don't know much about factories or power plants so correct me if I am wrong but factories and/or plants don't run off crude oil. Don't they use power from nat gas generators, coal fire power plants, nuclear power plants, etc...
There are quite a few peaking power plants that can run on fuel oil but primarily run natural gas. Also, around here, several of the biggest "industrial" users (loose definition) are Universities and hospitals with district hot-water/steam heat. My alma mater ran on natural gas 90% of the time, but had several thousands gallons of bunker C fuel oil for backup (having a huge interruptible contract got them very good deals on natural gas). Every year they'd burn oil for a few days, just to keep the oil-boilers working and cycle stock in the tanks.
joeltrout wrote:
Also there are very, very, very few nat gas vehicles. They are even fewer nat gas filling stations. That is at least a decade away from taking much of an impact from oil consumption in terms of gas or diesel.
In the North American market you are right, particularly when you take fleets (buses and public service vehicles) out of the picture. In the rest of the world, the popularity is growing very fast. Fast enough replacement of petrol/diesel cars in gas-rich areas that it will put a major limit on North Americans importing (LNG) their way to continued energy hogging. _________________ At 1% annual growth, human bodies will incorporate every gram in the observable universe in approximately 10,170 years.
Joined: Feb 20, 2005 Posts: 2677 Location: Uppsala, Sweden
Posted: Fri Aug 01, 2008 4:27 pm Post subject: Re: The Natural Gas Price Watch Thread
joeltrout wrote:
Starvid wrote:
Nat gas is a direct substitute for oil. On the very short term in peaking plants and factories,
I don't know much about factories or power plants so correct me if I am wrong but factories and/or plants don't run off crude oil. Don't they use power from nat gas generators, coal fire power plants, nuclear power plants, etc...
Many gas turbines and furnaces in factories and power plants switch between oil (or rather some refined product) and gas depending on fuel prices.
joeltrout wrote:
I think the "little longer term" phrase is meant to be several years if not more than a decade out. Most of the country uses nat gas already for heating and cooling. The NE is the primary user of fuel oil and until they get the pipelines built it will be years before people can switch.
Also there are very, very, very few nat gas vehicles. They are even fewer nat gas filling stations. That is at least a decade away from taking much of an impact from oil consumption in terms of gas or diesel.
Please correct me if I am wrong.
joeltrout
Well, 10 years is a "little longer term" or "medium term", don't you agree? _________________ Peak oil is not an energy crisis. It is a liquid fuel crisis.
Posted: Mon Aug 04, 2008 3:12 pm Post subject: Re: The Natural Gas Price Watch Thread
raythemoneyman wrote:
When it comes to Nat Gas, I am trading the news not the charts. This is a buying opportunity. I am in CHK, UPL, CLNE and COP. Change is coming, I don't think there is any stopping it!
ray, what is causing this huge sell off in nat gas stocks ??
My stocks are getting crushed. I'd reckon alot of the
companies again will cut back on E & P if it goes back to
4 bucks.
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