GREY:CNKEF - Post by User
Post by
backabockon Apr 11, 2017 2:52pm
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Post# 26108428
AECO, Climate and Electricity production.
AECO, Climate and Electricity production.AECO daily prices are above expectations.
https://www.gasalberta.com/gas-market/market-prices?p=pricing-market.htm
North American climate has significant chance of exceeding seasonal averages in southern US:
https://www.cpc.ncep.noaa.gov/products/predictions/long_range/seasonal.php?lead=4
A nice map of where the natural gas plants are (note the overlap with above average temp):
https://www.washingtonpost.com/graphics/national/power-plants/?utm_term=.7d9a102ee9b6
Needless to say, hot weather = more air condition = more electricity = higher nat gas prices. Also, from a market risk perspective, since gasoline supply gets maxed out fairly easily, retail consumption of petroleum products loses elasticity over summer driving season. This will put pressure on oil producers (not even considering OPEC cheating), which reduces pressure on "by-product" natural gas -- and that is good for pure nat gas producers.
The market risk to hold CKE is small. They publicly stated they are producing at 25MMcf/d (or thereabouts.) That's 4100 boe/d * high-assumption-netback, because right now nat gas pricing is outperforming.
I have no idea why I would panic and sell now, when the SP looks favorable.