fyi, keyword=natural gas If our government can play smart, they (we) can gain lots of money from this condition, that IF not being outsmarted by foreigners.. Remember we have lots of natural gas. Is this the reason behind ENRG? Note: BBM Industri naik lagi. Regards, DE Why are Oil prices skyrocketing? 10/17/07 By S R Nunnally Well, I'd wanted to talk about something different today, but fresh highs today keep me coming back to oil prices. Yesterday, in TFN's Commodities & Resources Report, I told readers about a possible flag formation in oil futures prices. Today's action continues the upside breakout, taking oil futures to just below $88 a barrel.
I have to be honest with you: I'm a bit flabbergasted. All signs pointed to a slowdown in oil prices -- at least momentarily. But now that oil prices are remaining high, what's in store for this winter? The Energy Information Administration is already pegging heating costs to be 10-16% higher. Winter is expected to be about 4% colder, even though just the other week it was 90 degrees here in Baltimore. That means demand for heating fuels will likely be higher than it was last year, putting even more pressure on prices that are already rising. After bottoming out in early September, natural gas has started to climb. It's interesting to note that this rise is in the face of higher natural gas stocks and mild temperatures. Temperatures are starting to trend back to normal, though. It actually feels more like fall here in Maryland. With colder temperatures on the horizon, natural gas might actually be a good play heading into November. I don't think we'll see as steep a rise as we've seen with oil prices, though. It could be that these higher oil prices will help pull up natural gas prices, and the two could start trading more in tandem. That could take the remainder of the year to play out though, and I don't think we'll see much correlation until we get to the meat of winter, possibly in January. One way to play these two commodities is with the AMEX Natural Gas Index (XNG). Its components consist of both pure natural gas companies like National Fuel Gas Co. (NFG:NYSE) and mixed companies like Andarko Petroleum (APC:NYSE). Longer-term calls might be a good way to play the XNG, or you can pick and choose from the XNG's components for a pure natural gas play. The EIA said something interesting in this regard: "If the average temperature was 10 percent warmer than the baseline forecast throughout the entire winter period, according to the STEO (Short-Term Energy Outlook) projections, heating oil consumption would decrease by 9 percent while prices fall by just 1 percent. Conversely, if the average temperature was 10 percent colder than the forecast, heating oil expenditures would be 32 percent above those from last season." In either scenario, heating costs are still awfully dependent on oil prices. Without a "fall lull," as I was telling readers yesterday, we're starting at a higher baseline for a rise through winter. As much as I mistrust this current upside breakout (I think some hedge funds are becoming increasingly influential), I can't argue with the numbers right now. Courtesy: Taipan Financial News
