Natural Gas - July 10

[dan_s]

Working gas in storage was 3,102 Bcf as of Friday, June 29, 2012, according to EIA estimates. This represents a net increase of 39 Bcf from the previous week. Stocks were 602 Bcf higher than last year at this time and 573 Bcf above the 5-year average of 2,529 Bcf.

We should see another bullish storage report on Thursday. If the differential to the 5-year average continues to fall, which I think will happen during July & August (based primarily on weather forecasts), then I believe we will soon see NG over $3.00 and we have a chance at gas moving over $4.00 this winter. Wishful thinking? Maybe.

The most important stat is that gas in storage stay under 4 TCF heading into the winter. Combined with a cold start to winter and we will see $4 gas by year-end.

The number of rigs drilling for dry gas continues to fall and demand for power generation continues to be strong.

[dan_s]

If I'm right about natural gas prices, Cimarex Energy (XEC) should do quite well over the next six months.

http://seekingalpha.com/article/711211- ... urce=yahoo

[dan_s]

The Turning Point
For the first time since the EIA has been gathering data on U.S. energy consumption, electrical power generated by natural gas equaled that of coal.

Each accounted for about 32% of our total generation in April; the same percentage as coal. You can bet that from May - August it will be even higher :

Natural gas has also trumped coal as the power source for new power plants.

Over 80% of generators built during the last ten years have been geared toward natural gas: