Can you believe it?
After looking for months at declining prices, high inventories and increasing production finally the EIA said last week that it would revise production figures later this month and the revisions "will be significant."
The number of rigs drilling for natural gas plunged as gas prices retreated from their 2008 summer highs above $13/MMBtu. The rig count dropped from a peak of 1,606 rigs in August of 2008 to a low of 665 rigs by mid-July 2009, according to data from oilfield services provider Baker Hughes. However, natural gas output from the lower-48 states, over that same time period, fell just 1.2% to 62.55 billion cubic feet a day, according to the EIA. (US GAS: Futures Climb On Expected Gas Production Revisions).
The result is that prices soared from $6.82 to $7.62 in just 2 days. There is room to the upside as shorts will be squeezed. At the beginning of January UNG was above $10! The higher trendline of the channel that contained prices during the past 3 months is at $8.70.
My long position on UNG is starting to be less painful, but I am still far from breakeven.
On April 30, the EIA is scheduled to release its natural-gas monthly report for February. In the report, the agency will use the new methods to estimate gas supply and revise its January numbers. The numbers for 2009 won't be updated until late fall (Natural-Gas Data Overstated).
We will see if expectations can help keep up the momentum.
Interesting news:
Are Natural Gas Reserves Now Overstated?
Energy: Progress frozen
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