whiteBlackBg

FMX | Connectwww.fmxconnect.com - (Reported 5/14/2010)

Responded to by one of the FMX Community members, an Energy Trader at a $500MM fund. 

 

Transcribed IM:

FMX:Why are natgas inventories only 4% higher than last year when there are 30% more rigs working?pls explain
NG Trader: thats the wrong question
FMX: someone asked us

NG Trader: listen
FMX: well?

Ng Trader: Inventories is the result of a supply and demand equation that has 7 moving variables: production Canadian imports, LNG imports, Mexican exports, power demand, industrial demand heating demand and pipeline loss/demand
 rigs have only to do with production

the question is...why is production setting new records ( it set a new all time high last week) when rigs are 50% below their high of 18 months ago.

FMX: because of  horizontal drilling

right. the second question is: why are prices so high and so much higher this year, when inventories  are 4% higher than last year and last year it was widely held view that armageddon had come to natural gas and inventories would be so full that prices would collapse to $1

another answer to your question is, how did inventories get 4% higher YOY after one of the coldest winters nationwide of the last 10 - 15 years, where we had record snow all across the deep south??

nat gas should be at least $1 dollar lower IMO.

FMX: thank you for that.  testy bastard!

 

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