NG Storage Report - BEARISH

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dan_s
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Joined: Fri Apr 23, 2010 8:22 am

NG Storage Report - BEARISH

Post by dan_s »

Working gas in storage was 1,912 Bcf as of Friday, April 23, 2010, according to EIA estimates. This represents a net increase of 83 Bcf from the previous week. Stocks were 101 Bcf higher than last year at this time and 303 Bcf above the 5-year average of 1,609 Bcf.

In my opinion, the only thing giving any support to natural gas prices is the high oil price and the belief (that has been true in the past) that eventurally the wide gap between oil and gas prices has to narrow. Eventually, I do think gas prices will move back toward 1/6 the price of oil but that day is way out there now with so much gas on the market from the shale plays.

Low gas prices means fewer gas prospects make sense to drill now. It also is bullish for the industries that use a lot of gas so maybe they can lock in low energy prices and demand will pick up. This all takes time to work through the system.

My advice for now is to keep most of your portfolio in those E&P companies heavily weighted to oil. The Sweet-16 Portfolio is heavily weighted to oil.

Dan
Dan Steffens
Energy Prospectus Group
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