An interesting week All this takeover talk is interesting but as I finish the week , I am looking at another potential disaster for nat gas shorts .
One site I check in on is fxempire , there is a writer (named Chris Lewis) who keeps advising people to short nat gas (NYMEX Mar contract) at $3 and as he puts it , "fade the rally" . As I watch that action and juxtapose it with the weather reality , I see to worlds colliding .
Now consider this , last week had healthy demand and will probably withdraw another 200bcf draw next Thur Feb 11th . This week is shaping up for huge demand and I see the draw reported on Feb 18th at 300bcf or greater and if cold weather hangs on in populated areas (Phi , NY , Bos , Wash , etc) Feb 28th report could show another 250bcf drop . Now 750bcf reduction would leave US inventory at 1.9tcf with 5 weeks left in the historic withdrawl season . With heavy draws like that , there is no way that the Mar contract falls any lower than it is today and as month end closes in I expect a massive short covering which will push nat gas over the $3.50 to $4.00 level . As this plays out , gas producers should see more acceptance in the overal market . Even Amazon has bought 1000 nat gas motors for their fleet as EV's still present challenges and lack supply or infrastructure .
All O&G prices are rallying and that bodes well for FCF , Q1 numbers will be stellar and when you look back at 2020 Apr/June prices , 2021 Q2 numbers will be exponential in comparison . To wrap up my point , I see continued appreciation through the next 6 months and beyond