By: CAPTAINHOOK
-- Posted Monday, 11 May 2009
Many are wondering what the heck is going on in the natural gas (NG) market, because if it’s suppose to be such an essential commodity, why does the price keep crashing, especially with stability found in the larger equity complex? To answer this question properly, we must first set the stage with the appropriate background understandings, where because of the extremes in pricing we are seeing here, previous efforts in this regard now appear insufficient. In the first place, in order to fully understand what is occurring here, one must realize that the NG market is now showing all the signs of an extreme manic blow-off, only instead of an upside exhaustion, we are witnessing a ‘selling panic’. In this regard then, the important thing to realize is extremes in speculation and emotion are now in control of this market, not the fundamentals, making it the ‘mania de jour’.
When I say fundamentals, what I am referring to here is not the mechanical futures related trading constraints that characterize our faulty and fraudulent pricing mechanisms, with Nymex being central in this regard. No, that is largely how we got into this mess, where I say ‘mess’ because the longer wrong-headed speculators and faulty pricing mechanisms keep prices down, the more long lasting the damage will be, which will eventually cause an equally manic reaction higher in price. And this will likely occur just when we do not need it, where we could stand to see the extreme sell-off correct right now to avoid such price swings in the future. Be that as it may however, and for whatever reason you wish to discuss, with the propaganda machine widely discussing the expectation of increasing inventories through summer due to expected cooler than usual temperatures now, prices continue to fall, with no end in sight being the central perception at present. (more)
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