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Vet67to82

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Vet67to82's Blog : Natural Gas Supplies and UNG

April 30, 2010 Edited: April 30, 2010

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Basically, you have to look at UNG as a " TWO-part'er".... something for the Bulls and the Bears .... and that's supply and demand.

Depending on the "Season", Increasing supplies are bearish ... while decreasing supplies are bullish for nat gas and therefore for UNG. Depending on the "Season", Increasing demand is also bullish ... while falling demand is bearish.

I. Demand Part A and B

Part A is "bullish" in demand (heating) focused winter months when futures contracts are rolling over from current month into a pricier foward month.... which will STILL increase in price and value due to demand. More than 50% of USA homes use nat gas heating, in addition to the power plants using nat gas to generate electricity for the electric heat homes.

(1) Here, you can get BAD weathe, or REAL BAD weather, r related spikes and increses ... thank you ol' man winter ...

(2) Also, here, Bulls owe a thank you to the US EIA. Investors (usually) get a weekly boost every Thursday (10:30 AM) when the gas supply report comes out.

Part B is "bearish" upon the end of the heating season ... as any near month contract you're thinking of buying ... IS going to decline in price as demand slacks off 'till power plants start buying to fuel summer power demands (air conditioning, etc) the US EIA report will " usually" be reporting "Bear friendly" nat gas supply "increases."

II. Supply

The US EIA counts gas in storage, and in the pipelines as "Supply". The equation is basically reduced to: Did the net storage figure, as reported by the US EIA, go up, or down?

Part A - Supply goes UP ... and here, the US EIA report will " usually" be reporting "Bear friendly" nat gas supply "increases."

Part B - Supply goes DOWN ... and here, the US EIA report will " usually" be reporting "Bull friendly" nat gas supply "decreases."

Soooooo, you have a 'long' and 'short' window of opportunity with UNG. But, you have to understand "Seasonality" .... or read my posts on Seasonality ....

Read

(1) Nat Gas 101

http://www.peopleandpicks.com/blog/Vet67to82/3287603/Nat-Gas-101/

(2) Seasonality

http://www.peopleandpicks.com/blog/Vet67to82/3142516/Seasonality/

Tags : UNG XOM CHK COG WMB SD

3 Comment(s):

JoeJustJoe Date

April 30, 2010 11:19 Abuse this post

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Actually, "supply n demand" have absotootimussly nuphin to do with the price of natgas. I touched on this briefly yestermaday with my spewage about USO vs the Earlpig stocks as a result o'the mess BP n RIG created in the gulf o'Mexico. The stocks are getting pummeld whilst the "ave idiot" is actually sssthinkin that this debacle will have some kinda effect on the supply o'crude Earl. Wrong agin. As I sed yestermaday...the "positive" to the negative is the fackt that the moneyrunners are also riding the spot price o'gasoline up along with crude. Now I will be able to bring gas at the pump down to wherst it "should" be...which is mo like belowst 1.75 per gallon. Pleez doan fergit to thank me whenst (not if) you see it happnin. The even better news is that you kin see how I have begun to werk my majic on the Evil Empire o'GS. I will also be bring every single Wall St trading house to its knees here shortly. THAT is the "actual" reason fo the fall in UNG n GAZ....gots nuphin to do with sooply atall. *-) BTW, I will be giving you one mo chance to come to yer senses with BAC. I rarely provide these kind of opportunities so I "hope" you will chort the next rally in BAC....it's goin bankrupt in all likelihood...sorry >>> :-( 3J

JoeJustJoe Date

May 7, 2010 11:48 Abuse this post

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I see that this post wuz at the top o'the list of most wreck-o-mended....so I figgerd I'd stop by to see how me USO call wuz doing. The eeeasy way to find out would be to simply look at a chart of USO and see wherst it twus on April 30 vs wherst it is now. I'm wreckin yer wonderin how I knew...right, Vet? :-) 3J

Vet67to82

May 19, 2010 12:07 Abuse this post

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5/18/2010 ... resistance in tn the S&P500 seems to be 1170 -1172 area ...

Well. since the well blowout in the gulf ... gov''t is now leaning toward nat gas ... and I think you could begin to see a push to get big rig trucking using nat gas ... and more of our "larger" vehicles ... it makes great sense as a transition fuel and great sense as a way to lower the USA trade deficit ...

ALSO ... " sovereign " wealth funds like CHK ...

Chk is using the money to pay down debt which will (1) reduce interest expense, and (2) increase earnings ... and I agree with them and CHK's CEO .. CHK' s market cap of around 14.2 B is way too low ... should be 56 to 57 Billion ... so CHK is on sale BIG TIME due to nat gas pricing ...

XOM is buying XTO now ... because XTO is on sale -- quite a deal for the assets

... very few stocks left from the " 2008 global market meltdown " that have that VALUE ...

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