Thursday, June 4, 2009

Natural Gas Will Overflow in 10 Weeks: Top of the 5-Year Channel Was Breached

Natural gas inventories were reported today, showing a buildup of 124Bcf.

(please click on images to enlarge)

The stocks are now 2,337Bcf, an astounding 30.5% higher than last year. Moreover, the storage curve has breached the top of the 5-year average channel:

At this pace, there will be no where to store the gas by mid/late summer. What will happen to the price of natural gas is easy to conclude.

Given that the North American maximum storage is around 3.6Tcf, and we are adding 124Bcf per week, another 10.2 weeks should do it. Unless more storage is created, this is a disaster in the making, and a potentially extremely lucrative opportunity.

We can only hope that natural gas utilities are making wise purchases this year so what consumers pay very little in the next heating season.

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