Gas Petrospective – November 28, 2011
Natural gas prices were up 22.6 cents per million Btu last week, with 12.7 cents of the gain coming on Wednesday and Friday. We have to believe that a fairly decent chunk of that was short-covering going into the Thanksgiving Weekend or part of it. Of course, it is difficult to figure out exactly which part of what would have been short-covering because markets were open on Friday … but the general theory remains.
No one wants to get left doing clean-up or being the last one off the plane. Futures markets often resemble plane rides, and everyone starts eyeing each other narrowly as the plane comes to a rest. Once one gets stuck standing but unable to move, the game is half lost. And, in natural gas futures, in 2011, no one wants to be caught long or short knowing how sharply quotes can and do move the other way. Today, though, we have to imagine that the real urgency will be to avoid being too long for, well, for too long.
After last week’s surprising build of 9 bcf (estimates called for a draw of up to 19 bcf), stocks are 23 bcf higher than a year ago, against a surplus of 14 bcf (+0.36%) a week ago and a deficit of 17 bcf three weeks ago And, against the five-year average, they are now 233 bcf higher (+6.44%), compared 201 bcf more three weeks ago. We will need some sustained cold weather to eat into the surplus.
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