zman’s Energy Brain

oil, gas, stocks, etc…

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Gas Today

Posted by zmann on November 22, 2006

I’ll make this simple so that even CNBC can understand it.

Anyone with an objective eye would have projected a withdrawal from storage today.  The fact that we only got a 1 Bcf decline is shocking to me. Consensus was for a small draw despite CNBCs guest who said it was for a build and remarked that this was a bullish number. In no way is this bullish.

If anything, it demonstrates that high prices are again beating back industrial demand.  Weather was much cooler than it has been yet storage was essentially unchanged.  We had similar weather 3 weeks ago and managed to pull 7 bcf which was down from the prior week when weather had been warmer.

You can easily see the impact higher prices are having on demand when you look at the 2 charts below together,

gasvshdd1122.JPG

CNBC, please do a little homework. Gas is lower because it should be but people see the stocks down and starting buying when you and your perma bull guest say it should be otherwise. Gassy stocks have paired their gains while gas is down after the report. You guys do a disservice to your viewers when you spin instead of report and especially on a light volume pre holiday trading session.

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5 Responses to “Gas Today”

  1. Soccer_F1 said

    CNBC guys must be long oil & gas.

    They cannot possibly be so incompetent.

  2. Happy Thanksgiving everyone.

    -SaneO

  3. Soccer_F1 said

    Total gas in storage stood at 3.449 trillion cubic feet, up 174 billion cubic feet from the year-ago level, and 240 billion cubic feet above the five-year average, the government data said.

    How can natgas prices stay so high?

  4. zmann said

    Soocr,

    The hedge funds remain in charge of the gas market and are convinced that winter will bail them. As it becomes more apparent that even the worst winter on record would still yield very high levels of trough storage they will start heading for the exit. Slowly at first and then the door frame won’t be able to accomodate them as they try to jump ship all at once. We saw it during the Amaranth debacle and it will happen again, knocking gas at best to $5. Worst cast is harder to say but I’d guesstimate $3.50 to $4.00.

    Happy Thanksgiving and thanks for the comments and hits to the site. If anybody has questions I’ll be back briefly on Friday but am happy to chew over ideas on the weekend.

  5. Jon said

    Happy Turkey Day, Zman!

    How’s this for a headline? “Oil May Rise on Increased Demand for Heating Oil”

    http://www.bloomberg.com/apps/news?pid=20601109&sid=aKCCZnG1itPc&refer=home

    But in the article, 49% think oil will rise, but 52% said so the week before. Then it also goes on to say that temperatures in the Northeast are predicted to be above normal, lowering demand.

    Hmmm… The headline should read “OIL MAY RISE DUE TO SILLY HEADLINES”

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