UNG and natural gas price might bottom

Update: April 28, 2015:
Monday NG price sharp drop on option expiration day, suggest the dominate player still in short position for the last May options chain.
Will the dominate play change from short to long? Here are some reason that they might:
a. May is typically the year where most NG price find the bottom.
b. The first U.S. LNG export facility to file for FERC approval, and begin construction, was Sabine Pass in Louisiana. This four-train facility received approval to export 2.2 Bcf/d, and is scheduled to enter service by late 2015, with full capacity projected to be online in 2016. American LNG export contracts to Henry Hub over the past two years. Lower oil prices are further strengthening such intentions and would be another step toward convergence in global gas pricing instead of indexation with oil.
c. above-normal temperatures that would boost demand from power plants. Power generation absorb most over supply of NG in 2012.
 —————————————————————-
(Updated, initially published when UNG at $13.2 at stocktwits and our facebook pages or Feb 9th here: https://twitter.com/topcools_com, when UNG price at 13.2, the exact bottom)

 

A lot of bad news happened to Oil and Natural gas recently. the growth curve of shale natural gas also looks up and scary. UNG  at historical low of $13.2.spot price for gas has dropped below $3 for a few days. here is some point UNG might be set for a bounce.  The sharp down of oil+rig will up natural gas price in gigantic trend, switch from $RUSL,$UWTI, $GASL(rely on both oil and gas) to $UGAZ:

 

1. cold weather soon on northeast of US.

2. Oil used to be the primary profit point for most drilling, now also significantly below cost. rigs for both oil and gas have down significantly. as long as both oil is in depress and gas in tear, there is no reason to drill for gas. , and drilling equal to losing money at persistent low oil price (it will be due to EM in downturn).

3. gas storage still at middle of 5 years.

4. Total supply increase 0.91%; total demand increase to 7.4% last week.

5. energy investment heavily diverted to Russian oil asset (see here)

6. the US natural gas sell at 30% of the rest of world average price(EU and Asia at $10~$11, production cost at US at $4.85), but technology cost not much difference and Shale gas drill has the highest cost of all drilling. so its profitability primarily or solely tie to high oil price. the depressed oil price will eventually crash drilling and drive up US natural gas price. In simple term: oil/gas company has to earn money to survive, if oil stay low(we believe it will as US/Saudi pressing Russia and Iran, as EMs in big downturn), then US natural gas price has to rise. the sharp drop of rig count at the bottom chart is showing that trend soon to happen.

 

“The current downturn in oil-directed drilling should help natural gas prices,” Gilmer said. “That’s because much of the recent natural gas output has been as a byproduct associated with oil.”

 

if so, then good to buy UNG stock below $13.2 or UGAZ at that level (GASL has run too high too fast). Giving Putin’s ambition and lies, the fight between him and all of western countries will continue. plus the biggest EMs in downturn, we prefer safety and big trend of UGAZ and UNG. buy UGAZ below $3 and UNG below $14.

UNG has volatility at 51% at price of $14; UGAZ should have 150% at $3.

 

Dave Liu —Topcools editor

 

U.S. natural gas supply – Gas Week: (1/28/15 – 2/4/15)
Percent change for week compared with:
last year
last week
Gross production
12.61%
0.46%
Dry production
12.49%
0.46%
Canadian imports
1.69%
2.87%
      West (net)
-4.64%
-9.17%
      Midwest (net)
-8.63%
16.61%
      Northeast (net)
32.63%
16.71%
LNG imports
130.58%
56.93%
Total supply
11.99%
0.91%
Source: BENTEK Energy LLC
billion cubic feetWorking natural gas in underground storage5-year (2009-2013) maximumWorking Gas in Storage5-year (2009-2013) minimumJul ’13Jan ’14Jul ’14Jan ‘1501,0002,0003,0004,000Source: Form EIA-912, “Weekly Underground Natural Gas Storage Report”
Temperature — heating & cooling degree days (week ending Jan 29)
HDD deviation from:
 
CDD deviation from:
Region
HDDCurrent
normal
last year
CDDCurrent
normal
last year
New England
297
22
-35
0
0
0
Middle Atlantic
277
14
-71
0
0
0
E N Central
269
-25
-121
0
0
0
W N Central
203
-107
-153
0
0
0
South Atlantic
183
3
-75
3
-5
1
E S Central
173
-11
-102
0
-1
0
W S Central
93
-41
-93
1
-3
1
Mountain
164
-62
-49
0
-1
0
Pacific
67
-48
-6
0
-1
0
United States
192
-30
-80
1
-1
0
Note: HDD = heating degree-day; CDD = cooling degree-daySource: National Oceanic and Atmospheric Administration


———————————————————————————————————————-

Natural gas has been below 5 year average for sometime:

source: http://www.eia.gov/naturalgas/weekly/#tabs-supply-2

 

 

More http://www.vcoolinfo.com/?p=6093

 

 

 

 

FavoriteLoadingAdd to favorites
redditpinterestlinkedintumblrredditpinterestlinkedintumblr
Tags:

Notices: (place mouse cursor here will stop text move).
1. Be sure to REFRESH your browser to get to new always 720p feature! Read this if you don't know how.
2). Masterpiece Top 100 and My Favorites are ready for use; F5 to refresh if u can't see your favorite.
3). Our survey indicates most people never know 50% to 90% of our Masterpiece Top 100.
4). Sort at front/home page to rank everythings at TopCools; Shrink browser to size of business card can reduce network usage.
5). All registered users can now login, if can't receive email, please check your email "spam or junk folder".

  Copyright © 2017 vCoolInfo | Android App Download   FAQ  Copyright  About us   Usage terms   Privacy policy   Contacts  Recommend