Thursday, May 21, 2009

Natural Gas Buyers Taking (Blood)Bath Today; Solar Too

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Live by "the thesis that has no support in reality"; die by "the thesis that has no support in reality". A lot of the hot themes of late are seeing serious bludgeoning today. I always so love the "oil is up, therefore I must buy solar stocks" thesis - that was working great until a bevy of solar companies actually were forced to report earnings today.

Natural gas? Not so much... (that said anyone who bought these type of sectors on nothing more than green shoot dreams made a lot of money ignoring reality so I cannot fault them) I can at least "see" why the other commodities are running (China; priced in lousy US dollars), but natural gas is such a "local" commodity and the US is in such shambles... I simply did not get the run up outside of pure speculation. All that hub bub about nat gas and we are almost back at yearly lows. Kool Aid at its best.


Via Bloomberg
  • Natural gas futures fell the most in eight weeks after a government report showed a bigger-than- forecast increase in U.S. inventories, as the recession cuts demand for the industrial fuel.
  • Supplies were 22 percent higher than the five-year average as factories and power plants trimmed purchases during the worst economic slowdown in a half century.
  • “This number surprised everyone it appears, so there’s a violent reaction,” said Brad Florer, a trader for Kottke Associates Inc., a commodity futures broker in Louisville, Kentucky. “This is just another sign that this economic turnaround we keep hearing about may not exactly be in place yet. Let’s call it a mirage, so far.” (I prefer Kool Aid, but mirage will do)
  • I never believed that demand was commensurate with the run-up we’d seen in prices,” said Michael Fitzpatrick, a vice president for energy at MF Global Ltd. in New York, who correctly forecast a supply increase of 103 billion cubic feet. “There’s still a lot of supply coming in every week.”
  • “The recession seems to have settled in for an extended stay and there are clearly not going to be any successful quick fixes,” Peter Beutel, president of Cameron Hanover Inc., an energy consulting company in New Canaan, Connecticut, said before the report was released. “Industrial demand’s resurgence is not even on anyone’s horizon yet.”
Again and as always - this is why the markets are such an intricate puzzle .... things that have no basis in logic happen all the time.

I call this "thesis buying" and we've had a ton of it the past 8-9 weeks... but especially prevalent the past 3-4.

Remember, the stock market has forecast 5 of the previous 0 recoveries.

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