The price of natural gas has dropped below $2 for the first time in more than a decade.
A mild winter and production boom have left the U.S. with more natural gas than Americans can consume. Storage facilities are quickly filling up. The glut has pushed down the futures price of gas 59 percent since it peaked at $4.85 last summer.
On Wednesday afternoon, the futures price passed a milestone. Gas fell to $1.991 per 1,000 cubic feet. The last time it went below $2 was Jan. 28, 2002, when it hit $1.91.
Cheaper gas has already lowered heating bills this winter, and air conditioning costs are expected to fall this summer because many utilities generate electricity with natural gas. Major American manufacturers — including chemical companies, fertilizer plants, aluminum and steelmakers — also should benefit as energy costs tumble.
"If you're a consumer, this is great news," independent petroleum analyst Stephen Schork said. "This could spark a real rebirth of American manufacturing."
Supplies of gas are high because improved drilling techniques have allowed companies to produce more from vast, gas-rich layers of underground rock. Homeowners also have been using less natural gas for heating, thanks to a mild winter..
Practically speaking, a one-day drop below $2 won't make much difference for consumers or the economy. But the ongoing slump in gas prices certainly will. Commodities traders also said that Wednesday's drop is an important indicator of how bloated the natural gas market has become. Natural gas supplies are 61 percent higher than the five-year average.
While consumers enjoy cheaper prices, producers will find it harder to turn a profit. Some have tried to slow production, but so far prices have continued to fall amid mild winter weather. Shares of natural gas producers Chesapeake, EQT Corp. and Energen Corp. dropped about 2 percent in afternoon trading.
Meanwhile, oil prices rose on positive signs for the economy and energy demand. The stock market is up. And aluminum maker Alcoa surprised Wall Street with a first-quarter profit, thanks to stronger sales to carmakers and other manufacturers. Alcoa is the first major company to announce earnings for the quarter.
Benchmark U.S. crude rose by $1.98 to $103 per barrel on Wednesday. Brent crude, which is used to price oil imported by U.S. refineries, increased by 48 cents to $120.36.
Retail gasoline prices fell by less than a penny to $3.915 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service. Gasoline has dropped by about 2 cents over the past week, but it's still 64 cents higher than it was at the beginning of the year.
In other energy trading, heating oil rose by 2.07 cents to $3.1164 per gallon while gasoline futures climbed 4.33 cents to $3.2929 per gallon.
Thursday, April 12, 2012
The Scariest Chart For High Yield Bond Holders
from Zero Hedge :
Highest Number of Oversold Stocks Since October (Bespoke)
Following today's sell-off in the equity market, there are now 226 stocks in the S&P 500 that are currently in oversold territory (more than one standard deviation below 50-day moving average). On a percentage basis, this works out to 45.2% of the stocks in the index. The last time there were more oversold stocks in the S&P 500 was back on October 4th.
Granted, the current sell-off hasn't been nearly as bad as the one we saw last September (yet), but because of the lack of volatility in the market over the last several months, the trading range for individual stocks became much narrower leading up to the current sell-off. Therefore, it didn't take as big of a sell-off to move the market and individual stocks into oversold levels.
To illustrate this, let's use the S&P 500 as an example. The chart below shows the price of the S&P 500 along with its trading range of one standard deviation above and below its 50-day moving average (gray region). In the lower chart we show the size of the trading range in percentage points from top to bottom. Back in early October, the market was significantly more volatile than it is today. As a result, the size of the S&P 500's trading range was above 9% and coming down from as high as 12.5%. Today, after months of a relatively placid market environment, the size of the S&P 500's trading range from top to bottom is 4.14%, or less than half of what it was then.
Act Fast Before Boeing Bounces Back Stock is oversold near term and likely to close a gap
Boeing (NYSE:BA) — The world’s second largest manufacturer of commercial jets and fourth largest military weapons maker had a spectacular 26% advance from its October lows. But since January, it has been consolidating within a narrow band between $71 and $76.
Despite analysts’ forecasts of significant earnings gains in 2012 and 2013, and a target of $86, the stock broke down from a gap at $73.30 to close yesterday at $70.60. The stochastic is telling us that the stock is oversold near term, and after five down days the stock, like the market, is due for a bounce.
On Monday, the company announced that Russiahad ordered four of its 787-8 Dreamliners. And after yesterday’s close, Alcoa (NYSE:AA) beat earnings estimates and said that it had unusually large orders from Boeing.
Traders are presented with an opportunity for a quick trade as the probability of closing the gap up to $73.30 is high.
McAlvany Weekly Commentary
A Look at This Week’s Show:
-Will huge corporate cash save the world?
-Are you in an economic conflict zone?
-Compliant geographical diversification strategy
-Will huge corporate cash save the world?
-Are you in an economic conflict zone?
-Compliant geographical diversification strategy
Norcini – Take That Gold Shorts as Massive Bids Shock Market
King World News / April 11, 2012
Today legendary Jim Sinclair’s chartist, Dan Norcini, told King World News that fresh gold shorts suffered large losses in yesterday’s trading. Norcini said massive bids came into the market as gold crossed $1,640, volume spiked and the shorts were squeezed. Norcini stated the buying which came into the market was intense, and caught many market participants off guard. Here is how Norcini described the gold shorts getting mauled: “The move in gold seemingly came out of nowhere yesterday. Gold had been down earlier in the session when a huge bid came into gold at the $1,640 level and that took out the shorts at $1,645.”
Dan Norcini continues:
“Earlier in the trading session when gold stabilized near the $1,635 level and pushed back through $1,640, somebody came in, out of nowhere, with huge size on the bids and there was a massive surge in volume. This took the price from $1,640, all the way up to $1,660.
So gold moved $20 very quickly, in roughly 30 minutes. It was a sharp rise in gold. There was a little bit of hesitation there and then another surge came in and took gold to $1,665.
From a technical perspective, they pushed out a bunch of brand new, fresh short positions. You might recall that last week there was a lot of selling which took place in gold as it fell through support at $1,640….
Chart of the Day - Atlas Energy (ATLS)
The "Chart of the Day" is Atlas Energy (ATLS), which showed up on Tuesday's Barchart "52-Week High" list. Atlas Energy on Tuesday posted a new 4-year high of $37.19 and closed up 1.27%. TrendSpotter has been Long since Feb 27 at $26.94. In recent news on the stock, Atlas Energy on March 14 completed the distribution of Atlas Resource Partners to unitholders. Atlas Energy, with a market cap of $1.8 billion, owns and operates natural gas processing plants and natural gas gathering pipelines.
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