RE: Thought about buying
I listen to the financial news reports a lot. A London commodities analyst seems convinced we will FILL STORAGE to capacity... even if some producers start shutting off their taps... which he doesn't think will happen as wholesale as some analysts are predicting. The reason being simply that they have payrolls and offices and land leases to pay for, not to mention debt they must continue servicing. As well, they are just like the OPEC nations where they do not trust that their associated producers would respond to an attempt to reduce inventories.
And the real problem is that demand is not growing... not returning...
He did say that once STORAGE IS FULL Nat Gas prices will get incredibly choppy in anticipation that some producers will simply go out of business - stop producing because they cannot pay the operators etc. Then the banks or lenders will own the Gas assets and can afford to sit on them for a very very long time waiting for prices to come back. All of this will contribute to incredibly high speculation and wildly fluctuating gas prices.
Technical Analysis will probably start to fail at that point because everyday will be some kind of insane "non-fundamental" "what-if-this-happens" price swing action moving in totally the opposite and unexpected direction. That said, the incredibly nimble could make even more money here buying in during the day and getting out on every upspike. Knowing when, and how far to take it, will take a brain much bigger than mine (my brain is incredibly HUGE but I tend to be very lazy and so I am only functioning slightly smarter than my bloodhound - not meaning to sound arrogant there).
My gut is telling me that Nat Gas is going to swing down for a bit. Charts are showing it but I don't really trust them to much and am not that great a TA student at this point.
What I am looking at with great interest is that Contango spreads between now and October futures seems to be shrinking... and mostly on the Sept / Oct side. What does that mean ? I don't really know - other than traders aren't thinking that October is going to be the traditional upspike in demand that it is in normal years when industrial is chewing up supply hungrily. And we all know that residential heating along can't make much more than a 10% dent in stagnant or growing inventory.
The producers can keep inventory topped up until the industrials (fertilizer / manufacturing / power generation ) get back in the saddle.
Sorry for sounding so negative. I want for this recession to be over as much as anyone but it is like trying to stack dominos in an infant's play pen. You get a few stacked up and suddently they are all being knocked over again by the baby (the economical realities).
My point of this whole exercise is I don't believe Nat Gas will be a long term play for sometime to come. A couple of guys here - Dumpster... frenchie... seem to have the weekly momentum sussed out pretty good and if they keep posting maybe we can follow them...
DISCLAIMER: ALL OF THIS IS ONE MAN'S OPINION AND NOT MEANT TO CHALLENGE OPPOSING OPINIONS (I WELCOME THOSE SO I CAN LEARN). IT IS GENERAL DISCUSSION ABOUT NATURAL GAS FORECASTING AND NOT MEANT TO BE USED AS GUIDANCE TO ANYONE FOR INVESTMENT PURPOSES. thank you.