CME Hikes Nat Gas Margins By 26%, Second Time In One Week

Tyler Durden's picture


By now everyone is aware that come February, and those January electricity and heating bills arrive, a substantial portion of any discretionary income the average consumer may have had will go out the window, once again hitting the US economy where it hurts the most: the 70% of it that comprises consumption. And while the cold weather persists, there is little probability of a quick return to normalcy for natgas prices, which is where the CME comes in. Having hiked natgas margins by 20% six days ago - a move which did nothing - moments ago the mercantile exchange resorted to tactics which are all too familiar to gold bulls circa the summer of 2011 when the CME was hiking gold margin not by the day, but sometimes by the hour. Sure enough, here is the second natgas margin hike in one week, this one by 26%. It remains to be seen if this follow up attempt to spook speculators achieved much if anything.

Source: CME

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Thu, 01/30/2014 - 19:58 | 4385948 fonestar
fonestar's picture

Do you guys stack physical natural gas too?

Thu, 01/30/2014 - 20:00 | 4385956 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

We only have yours.

Thu, 01/30/2014 - 20:05 | 4385968 fonestar
fonestar's picture

It's invisible, it has no intrinsic value.

Thu, 01/30/2014 - 20:07 | 4385977 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

Isn't Bitcoin invisible ?

Thu, 01/30/2014 - 20:11 | 4385983 fonestar
fonestar's picture

Yes, things that are invisible have no intrinsic value.  Like math for example.

Thu, 01/30/2014 - 20:41 | 4386060 InjectTheVenom
InjectTheVenom's picture

speaking of natural gas , anyone catch the SOTU the other night ?!    ;>)

Fri, 01/31/2014 - 01:11 | 4386888 Theosebes Goodfellow
Theosebes Goodfellow's picture

~"Do you guys stack physical natural gas too?"~

Propane. And a biogas digester, (7 horses in the 'hood). It's a gas... and a fertilizer! But it doesn't "stack". It kind of plops.

Fri, 01/31/2014 - 09:59 | 4387499 Toolshed
Toolshed's picture

" But it doesn't "stack". It kind of plops."

Just like foneystar's comments!!

Fri, 01/31/2014 - 13:09 | 4388323 Jack Napier
Jack Napier's picture

Somebody get fonestar a dictionary. Math has no intrinsic value. The value is entirely extrinsic; outside the math itself, as in what it is being applied to.

For example we may use math to build structures that are earthquake proof, but the value is not in the math, it is in the building. I'm sure we can agree that math has immeasurable value, but none of it is intrinsic to the math. Math is in and of itself is useless without practical application.

Gold OTOH has value in and of the material regardless of the fact that it also has practical application. Nat gas, not so much though. Metals have appeal beyond their industrial use, but this is not a blanket truth for all commodities.

BitCoin is somewhere in the middle. It has intrinsic value for the service it provides, but no intrinsic value for what it consists of. The caveat is that any intrinsic value for BTC is dependent upon other services that the government has control over (Internet and electricity) so they essentially control that value.

Sat, 02/01/2014 - 21:25 | 4392392 MeelionDollerBogus
MeelionDollerBogus's picture

You'll lose this argument which drills right down to the fundamentals of nature in physics.
What is the definition of math but the relations OF that which can be enumerated, measured & exist? So the existence of the universe itself with various measures (constants, it seems) for light speed, resistivity, etc., are all from the universe itself.
It matters not that we are alive to apply math to building things: the universe rebuilds itself constantly everywhere, even space itself expanding, from this math, which is made from the precise nature of the physics of things which exist.

Fri, 01/31/2014 - 11:36 | 4387945 Toolshed
Toolshed's picture

Isn't bitcoin based on math?

Thu, 01/30/2014 - 20:21 | 4386014 max2205
max2205's picture

Central planning 101

Thu, 01/30/2014 - 20:40 | 4386062 Trucker Glock
Trucker Glock's picture

I keep my NatGas in an encrypted wallet.

Thu, 01/30/2014 - 22:15 | 4386300 TheRideNeverEnds
TheRideNeverEnds's picture

I started stacking NG futures on the short side when they passed 5.40 yesterday but only held them till it went back to 5.20 where I covered em like a freaking Johnny today.


Hopefully it stays right around here for the next twenty days or so cause I am still short a rediculous ammount of premium in UNG around this level.


I think you should buy the dip and sell the rallies to keep it around $5; you know what with the polar vortex, fracking, ummm, Turkish yields.?. and all that.

Fri, 01/31/2014 - 04:27 | 4387055 SAT 800
SAT 800's picture

I'm glad you're covering; somebody has to supply my profits.

Fri, 01/31/2014 - 09:59 | 4387491 Toolshed
Toolshed's picture

So foneystar is just a garden variety troll after all. I was beginning to suspect as much based on his weak arguments. I am relieved to discover that he is not actually as stupid as he presents himself to be.

Sat, 02/01/2014 - 21:27 | 4392396 MeelionDollerBogus
MeelionDollerBogus's picture

you mean store compressed liquid natural gas?
Some people do.
In particular I don't because I'd like something a little easier to handle.
Parafin, wood, biodiesel, vegetable oil, that kind of thing.
Believe me, if I felt there was a way I could easily use beta-radiation to make a super-longlife battery I'd do it. The principle seems sound but the materials are "illegal" (imagine, nature being illegal), and shit like that would put Duracell out of business pretty much forever.

Thu, 01/30/2014 - 19:59 | 4385951 DaddyO
DaddyO's picture

Got Wood?

This may help...


Fri, 01/31/2014 - 10:02 | 4387505 Toolshed
Toolshed's picture

I am very disappointed DaddyO. I was expecting porn.

Fri, 01/31/2014 - 13:49 | 4388507 DaddyO
DaddyO's picture

Sorry, my porn days are long behind me...

Preparation in the new porn in the world we live in.

It's a sad day when a link to a wood burning stove is necessary to underscore the current state of affairs we find ourselves facing.


Thu, 01/30/2014 - 20:06 | 4385962 666
666's picture

If they could have harvested the gas from those cows in the barn that blew up in Germany when a spark ignited their farts, Nat Gas futures would be way down.


Thu, 01/30/2014 - 20:03 | 4385965 DavrosoftheDaleks
DavrosoftheDaleks's picture

Fonestar, unlike Gold, it's quite easy to carry around Nat Gas wherever I may go.  It even gets through the metal detectors.  Even your bitcoin holding phone can't do that!

Thu, 01/30/2014 - 20:06 | 4385969 fonzannoon
fonzannoon's picture

this really is hysterical at this point. For years we hear how the U.S is overflowing in nat gas and we get a cold month and everyone takes it in the ass from a nat gas shortage.

Thu, 01/30/2014 - 20:43 | 4386070 aVileRat
aVileRat's picture

Can't comment on the tape but the squeeze is akin to the Hurricane spikes. It's not a stock but a flow issue.

Plenty in the ground, not enough storage to justify an extra 9 Tcf of gas storage fields. The US states have been underinvested in utility heat/power for 20 years now. You may remember such famous utility schemes of skimping on investment for phonystar yields such as Enron & TPG/TXU.

This is the net effect. 

If the utility corps were more vested in developing new Co-Gen facilities vs. trying to bootstrap their ROE's, then the situation in general (a higher gas demand, more consistent prices, cheaper electricity for ALL the west coast base grid) would be a minor blip. Maybe 4.60/mcf tops. Coal, due to coal dust would be ineffective in situations like this and Nuclear can not be brought to max loads in this scenario either.

hash-code and amazon stock does not keep you warm, or fed.



Thu, 01/30/2014 - 20:54 | 4386110 roadhazard
roadhazard's picture

You don't think anyone in America is going to catch a break do you.

Thu, 01/30/2014 - 20:09 | 4385981 buzzsaw99
buzzsaw99's picture

the price is wrong bytchez

Fri, 01/31/2014 - 04:33 | 4387061 SAT 800
SAT 800's picture

Yes; it is; but it's correcting itself. The margin hike will help. The CME is helping me out; isn't that nice of them.

Thu, 01/30/2014 - 20:10 | 4385985 ultimate warrior
ultimate warrior's picture

I live in Wisconsin and I use Nat Gas. Luckily for me I'm with a company that has enough supply to cover the shortage but my tank is at 30% and If the cold keeps up I'll be out of fuel by March. I'm looking at my bill from Jan 13 2014 I paid $3.449 a gallon but March prices will likely be over $5.00 gallon. That's a 70 percent increase in two months! People will have to decide if they want to starve to death or freeze to death. Fun times!

Thu, 01/30/2014 - 22:19 | 4386389 Its_the_economy...
Its_the_economy_stupid's picture

r u sure ur not talking about propane?

Thu, 01/30/2014 - 23:00 | 4386496 ultimate warrior
ultimate warrior's picture

Thank you. Yes I meant LP.

As you can see I drink to much lol.

Thu, 01/30/2014 - 23:18 | 4386571 Iam_Silverman
Iam_Silverman's picture

"As you can see I drink to much lol"

I drink to much also.  New car?  I'll drink to that!  Some team you like win the game?  I'll drink to that!

Now, I've never drank too much.

Fri, 01/31/2014 - 01:21 | 4386902 Theosebes Goodfellow
Theosebes Goodfellow's picture

I'm with you, Silverman, but I don't drink any more. ...~... That said, I don't drink any less either. <:-P

Thu, 01/30/2014 - 23:57 | 4386696 the grateful un...
the grateful unemployed's picture

+ 100 :)

Fri, 01/31/2014 - 01:03 | 4386864 bluskyes
bluskyes's picture

Damn! I was hoping I could find a LNG service for my area.


Thu, 01/30/2014 - 22:49 | 4386487 Droel
Droel's picture

Yeah, what's up.  Do you get liquid nat gas delivered?

Thu, 01/30/2014 - 23:23 | 4386562 Iam_Silverman
Iam_Silverman's picture

Well, on the bright side - several wells around me (Barnett Shale) that had been shut-in due to uncompetitive pricing may soon start flowing again!  The flow of royalty payments can be seen as they trickle back into the community here in the form of work for fencing crews, or new pickup truck sales, or some have even purchased new stock trailers.  I have had my eye on a nice new aluminum Gooseneck Brand, with Rumber floors!


While nowhere near the $8 tcf rate that had this area humming during the go-go years, I can see an uptick coming.  I am not looking forward to the water haulers heading to the injection wells though.  The hills around here really slow them down (and all of the traffic behind them).

Fri, 01/31/2014 - 00:08 | 4386724 the grateful un...
the grateful unemployed's picture

the UNG stopped using the commodity exchange and went to swaps.

Fri, 01/31/2014 - 02:51 | 4386983 Bill Shockley
Bill Shockley's picture

Unless TPTB want a revolution where the guns come out they better get some LP to Wisconsin..


It's averaging around -20 degrees and more snow than has been seen in many years.


This situation is extremely serious.



Bill Shockley

Tomahawk, WI

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