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Nat Gas Plunges On Larger Than Expected Stockpiling In Inventories

Tyler Durden's picture


Nat gas is in freefall after the EIA reported a much larger than expected build up in natgas inventories: the Energy Information Administration reported an increase by 78 billion cubic feet for the week ended July 2. Expectations were for a 70 bcf increase, while the last week reading was at 60 bcf. The result is a freefall in the price of nattie which has now plunged 5% for the day, and is back to early June levels. Today's move is sure to result in major adverse P&L at some of the key players in the space.

From the ECF:

Working gas in storage was 2,762 Bcf as of Friday, July 2, 2010,
according to EIA estimates. This represents a net increase of 78 Bcf
from the previous week.
Stocks were 23 Bcf less than last year at this time and 285 Bcf above
the 5-year average of 2,477 Bcf. In the East Region, stocks were 64 Bcf
the 5-year average following net injections of 48 Bcf. Stocks in the
Producing Region were 128 Bcf above
the 5-year average of 834 Bcf after
a net injection of 19 Bcf. Stocks in the West Region
were 93 Bcf above the 5-year average after a net addition of 11 Bcf. At
2,762 Bcf,
total working gas is within the 5-year historical range.

Working Gas in Underground Storage Compared with 5-Year Range


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Thu, 07/08/2010 - 11:03 | 458321 SDRII
SDRII's picture

So, industrial production must be spiking

Thu, 07/08/2010 - 11:43 | 458391 Cursive
Cursive's picture


+1.  Nat gas is a "tell" that the economy is on shaky ground.

Thu, 07/08/2010 - 11:04 | 458324 HedgingInfinite...
HedgingInfiniteRiskIsNotPossible's picture

Somehow "gas, bitchez!" doesn't seem right here.

Thu, 07/08/2010 - 11:07 | 458329 Kreditanstalt
Kreditanstalt's picture

Well, what's new?  Anything with any real value to it, anything which represents physical wealth is being sold off relentlessly anyway...nat gas must be the most over-hyped, manipulated market out there.  Wish I had known it was to be a multi-year "investment" when I bought it...

Thu, 07/08/2010 - 11:07 | 458331 Edna R. Rider
Edna R. Rider's picture

Nat gas has moved down over the past 2 years.  It does occasionally rally but it is unclear why except as a short-squeeze, we-ran-out-of-ideas last alternative (that's how we play it any way).  It really isn't news that it moves down 5%.  It would be big news if it moved up 5% though.

Thu, 07/08/2010 - 11:15 | 458355 ratava
ratava's picture

stuff is cheap, speculators got fucked. not a bad deal.

Thu, 07/08/2010 - 11:25 | 458361 Rollerball
Rollerball's picture

NG is cheap because you will soon be able to burn ocean water in any two-cycle engine.

Thu, 07/08/2010 - 11:48 | 458400 Cursive
Cursive's picture

Thanks for the clip.  This is all very sad.

Thu, 07/08/2010 - 11:20 | 458359 godfader
godfader's picture

Negative P&L for one guy of the future trade is a positive P&L for the guy on the other side. Zero sum game.

Thu, 07/08/2010 - 12:14 | 458446 BearOfNH
BearOfNH's picture

... except for the short who actually delivers product, making a marginal profit on the transaction. That turns it in to a "negligible sum" game.


Thu, 07/08/2010 - 11:56 | 458414 sbenard
sbenard's picture

Collapsing demand for nat gas? Or spiking supply?

Now that businesses have completed their inventory restocking, perhaps some of both. Either way, nat gas prices are tumbling! At least there is one form of relatively cheap energy!

Thu, 07/08/2010 - 12:05 | 458426 Rogerwilco
Rogerwilco's picture

The "spiking supply" explanation is doubtful. Drilling for NG collapsed 18 months ago. The average productive lifespan of these wells is about three years, so without new wells coming online regularly, the supply should be contracting by now.

Thu, 07/08/2010 - 12:25 | 458464 BlackBeard
BlackBeard's picture

Expect some British fund to blow up soon.

Thu, 07/08/2010 - 14:29 | 458738 ziggy59
ziggy59's picture

plenty of gas all around..

wall street..




no wonder the price dropped..

Thu, 07/08/2010 - 15:45 | 458953 Crummy
Crummy's picture

Stockpiling on the imminent conflict in Iran, who has the world's second largest reserves.



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herry's picture

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