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Good to hear from you.
dev34
After a great F, had an okay G. Held a lot of term length on the risk/reward play.
dev34
Figured if we got no weather, all the customer and generator buying would be my stop.
dev34
It was.
dev34
Amazing that for the drop in price in H, the strips have really gone nowhere.
dev34
just a big chop fest.
dev34
i here your arguments, but think they are way exagerated.
dev34
Agree with 1.5-2 bcf/d more supply.
dev34
Call it 2 with LNG.
dev34
Imports from Canada should be negligible.
dev34
Now let's assume price for the summer is $4.
dev34
No switching, full liquids extraction, methanol and fertilizer running.
dev34
Electric generation demand, considering problems in west and very low hydro, around 1.5 bcf/d greater this year with normal weather.
dev34
Means you have to price 2 bcf/d out of market.
dev34
Don't think $4 does that.
dev34
What level did we start really losing demand last year?
dev34
It was higher than 4.
dev34
concerned about recession in industrial sector thats occuring right now.
dev34
Think gas is fairly valued here.
dev34
Dont think we're going to 7.
dev34
But I think fear of market considering what happened this past year will keep forward curve very well supported through spring.
dev34
we're already into storage economics so the front goes where the forward curve wants to go.
dev34
Forgot, I'm leaving town tomorrow afternoon.
dev34
Will be back Thursday morn.
dev34
We'll do it some other time.
dev34
but that's my point.
dev34
the demand destruction roared its ugly head beginning of Jan. The price level was $9.
dev34
Of course there is a lag.
dev34
Let's make up a lag time...say one month.
dev34
On Dec 1 cash was trading $6.70.
dev34
Probably a similar lag on the way down.
dev34
Cash is $5.20 today.
dev34
How much lost demand will there be in a month if we're still $5.2?
dev34
million dollar question if you can answer that.
dev34
Ina: Can you get this paid on a rush basis?
dev34
industrial demand the scary thing.
dev34
no question there are some steel mills and auto factories and plastics plants that were on last november that arent coming up now and its not due to gas prices.
dev34
the economy sucks and it will affect ind demand.
dev34
freak show.
dev34
started at -7.
dev34
went to -15 then -7 then finishing out -15
dev34
freak show.
dev34
cash started -7 then to -15 then -7 ended -15.
dev34
maybe cal 2.
dev34
i would not describe him as the hardest working man in the energy business.
dev34
i think this is the biggest chopfest in nat gas history.
dev34
scale up seller, scale down buyer.
dev34
reviewing my aga model and assumptions later today.
dev34
i'll see if i have any new inspirations.
dev34
are you free at 3:00 today to go over the aga model?
dev34
I think you need to check your AGA model.
dev34
7.2 bcf/d seems awfully high.
dev34
That's saying that had gas been at $2.5, the AGA for the week would have been 151.
dev34
Look at the AGA history for last week, this week and next week.
dev34
Do you really think the # would have been 151 with no demand destruction?
dev34
It wasn't even really cold.
dev34
That would have been the highest AGA # of the three weeks by 15 bcf.
dev34
Our guys are thinking 4.5 bcf/d.
dev34
Pira is saying that Feb as a whole averages 3.5-4 bcf/d.
dev34
That's just destruction and does not include new production, if any.
dev34
Further Pira estimates that March destruction will be about half of Feb. Assuming that gets to equilibrium: 2 bcf/d demand destruction, 2 bcf/d more production, 2 bcf/d more gas generation demand.
dev34
Start with a 400 b deficit and 200 injection days gets you to flat against last years storage in current price environment.
dev34
I think we are fairly priced fundamentally, but with huge customer imbalance for hedging from buy side, surprises in the market right now are to the upside in my view.
dev34
Course hard to imagine $6 for J. Just sell vol.
dev34
Are you around next Tuesday?
dev34
so according to your analysis, had we been at $2.5 gas and we were not bordering on a recession, we would have had the highest AGA number of recorded history for this week, last week, or next week by 15 bcf?
dev34
seems a little far fetched to me.
dev34
Our analysis is saying: gas at 2.50 we would have had 4.5 bcf a day more demand.
dev34
that includes commercial residential industrial switching processing...
dev34
as far as 2 bcf/d power gen demand- that counts the fact that last year was extremely mild versus expectation of normal summer this year, west will be running every gas unit virtually all hours as power demand is growing maybe 5% still and hydro way down.
dev34
every molecule that can will flow west from waha this summer versus little last year.
dev34
east power prices really havent reached point of priceing out demand and heat rates healthy enough to where gas can go up without raising power prices to cut demand.
dev34
some concern of more efficient replacing less but hard to quantify.
dev34
we're trying to build the stack now to estimate.
dev34
frac margins now positive for all but most inefficient processors.
dev34
will continue coming back.
dev34
a little concerned about 2 oil prices.
dev34
bordering right there now for places like florida and actually saw fl demand rise 100,000 last week as gas got to parity.
dev34
let me look into inj capability.
dev34
definitely bigger when field is empty from engineering standpoint so any problems really wont arise until fall when gen demand low and inj capacity lower...my initial thoughts.
dev34
bo seems as neutral as everyone else in the market right now.
dev34
really inactive.
dev34
to clarify, not raging bull.
dev34
i like everybody want to see what the inj numbers in april look like.
dev34
nobody putting a position on until that starts to clarify.
dev34
just think that hedging demand is making market a little short right now making next move up more likely.
dev34
would be scale up seller though not really sure why cash trades at 10-15 back.
dev34
doesnt make any sense.
dev34
however as more fields start turning around throughout month, the stg arb to great in my opinion to keep spread there.
dev34
must close one way or the other.
dev34
notice that spread tightened to 6-8 towards end of trading friday?
dev34
in general think that gas is reaching the elasticity stage right here.
dev34
50 cents lower and no switching, no processing, and gain back some demand.
dev34
market needs to see some big stg numbers first.
dev34
i think the best play right now is to start buying longer term put spreads.
dev34
Jan 4/3.5 look great to me.
dev34
if we get back to 2.8 and don't match last year's early weather, bombs away.
dev34
So my point shown a little bit right now..
dev34
Weather a little cooler for this week.
dev34
Overall normal for 6-10.
dev34