And I'm thinking it may be time to look for some gas producer stocks.
The estimated withdrawal to be reported Jan. 16 report is far and away a record at the same time volume in storage is 10% below the five-year average and Tuesday's STEO says marketed production grows at an average rate of 2.1% in 2014 and 1.3% in 2015.
Production growth is slowing at the same time we've convinced utilities to switch wholeheartedly from coal and the government does by administrative orders what it can't do by parliamentary means (see this week's New Source rules from the EPA in the Federal register).
So, it's either equities or longer-dated futures, we just passed a turning point kids.
Here are some instruments to give you ideas should you not have a four-star, weekend special, single-stock guaranteed lock on the tip of your tongue.
AMEX NATURAL GAS INDEX (XNG) 791.11 Down 11.57 (1.43%)
First Trust ISE Revere Natural Gas (FCG), $18.94-0.32 (-1.66%) which is the basis for the triple-levered Direxion Daily Natural Gas Related Bull 3x ETF (GASL), $30.82-1.73 (-5.31%), which is not something to buy til death do you part but which should hold its own while the inverse GASX, $27.81 +1.36 (+5.14%) collapses giving you a pair trade.
Do note the leverage in the last two.
From the CME:
Nat Gas inventory withdrawal at consensus
Nat Gas prices are now slightly below the level they were at just before the release today's weekly EIA inventory report with the spot Nymex contract still in negative territory for the session. Today's inventory withdrawal was right at the market consensus and as such the reaction so far has been relatively muted. The positive from today's stock report was the fact that the withdrawal did not underperform as it did last week. Next week's inventory report is likely to set an all-time record as most of the report period is reflective of the arctic blast that engulfed a major portion of the US.
The worst of the arctic blast has mostly moved out of the main part of the US and continues to move back where it came from… the polar north area. The latest NOAA six to ten day and eight to fourteen day forecasts are still projecting moderating temperatures for the second half of January. About 40 percent of the country is expecting above normal temperatures with only a few small pockets of below normal temperatures (upper Midwest and Deep South). During the second half of January the call on Nat Gas for heating related demand will likely be below normal and inventory withdrawals over this timeframe should come in below normal. The deficit gap between current inventory levels and last year and the five year average will narrow during the second half of January.
The above said there will still be a gap in inventory heading into the last two months of winter suggesting that Nat Gas prices are not going to fall out of bed anytime soon. Although we could see still prices drifting lower throughout the month of January.
From a technical perspective the spot contract is now solidly below the new resistance level of $4.20/mmbtu with the next stop possibly down to the $4 to $4.01 new support level. The market is currently down by almost 2 percent today and down by almost $0.38/mmbtu or 8.4 percent since peaking on December 23rd. At the moment the momentum is to the downside from a technical view.Here's the EIA's storage report.
Today's EIA report was simply neutral versus the market consensus, the so called normal five year average and versus last year. The report showed a net withdrawal that was at the market consensus (157 versus 157), and greater than last year but below the five year average net withdrawal for the same period. The 157 BCF withdrawal (below normal for this time of the year). The draw of 157 BCF was well below my model forecast (190 BCF withdrawal) this week. The year over year inventory situation remains in a deficit position versus last year and remains in a deficit position versus the so called normal five year average. The current inventory deficit came in at 314 BCF versus the normal five year average or about a negative 10.1 percent....MUCH MORE
From MoneyBeat:
True Impact of Arctic Chill on Natural-Gas Supplies? Wait Till Next Week
Like the rest of us in the U.S., natural-gas traders know it’s been cold. But the market will find out exactly how cold it’s been only next week, when the government releases hotly anticipated weekly natural-gas stockpile data.Finally, today's 5-minute chart from FinViz:
Today, the Energy Information Administration is set to report these gas figures at 10:30 a.m. New York time, but that data reflects supplies of the heating fuel last week, before Arctic cold gripped much of the nation. A survey of analysts pegs the decline in stockpiles at a higher-than-average 157 billion cubic feet.
Investors will have to wait for Jan. 16 to discern the true impact of the frigid weather on inventories. Analysts expect the EIA, which has been tracking natural gas data for roughly 40 years, to report a huge 300-bcf withdrawal. That would be the second record set this season, a sign of just how much the cold has been eating into U.S.’s natural-gas cushion and supporting prices....MORE
