Natgas sinks to 10-year low ahead of storage data

Natural gas futures slid to a fresh 10-year spot chart low by early Thursday amid expectations for another injection into already record-high inventories.

In addition, mild spring weather in much of the nation curbed any late-season heating or early cooling demand, pressuring prices to below the key $2 per million British thermal level in recent days.

Some traders said the market was oversold and due for bounce after losing 9 percent this month, but others expected few gains in the near term until hotter weather kicks up air conditioning loads.

Front-month May natural gas futures on the New York Mercantile Exchange were at $1.936 per mmBtu, down 1.5 cents, after sliding to $1.932, the lowest price for a front month since January 2002.

RECORD INVENTORIES

U.S. Energy Information Administration data last week showed total gas inventories rose to 2.487 trillion cubic feet, remaining at record highs for this time of year and standing nearly 56 percent above last year and about 59 percent above the five-year average level.

(Storage graphic: http://link.reuters.com/mup44s )

Most traders and analysts expect stocks to show a build of about 25 bcf when data is released today at about 10:30 a.m. EDT, a Reuters poll showed. Stocks gained an adjusted 42 bcf during the same week last year and on average over the past five years have risen 26 bcf that week.

If weekly stock builds through October match the five-year average pace, inventories would top out at 4.595 tcf, or about 12 percent above peak estimated capacity of about 4.1 tcf.

That could sink prices later in the injection season if storage caverns fill up and force more gas into a well-supplied market.

PRODUCTION ALSO NEAR RECORD HIGHS

The EIA's short-term energy outlook last week also offered little hope for bulls, with the agency sharply raising its estimate for marketed gas production this year for a third straight month.

EIA said it expects 2012 gas output to climb by 3 bcf per day, or 4.5 percent, to a record 69.22 bcfd, up from its March outlook that had output this year at 67.91 bcf daily.

EIA also forecast a significant 2.8 bcf per day, or 4.3 percent, gain in consumption this year, primarily due to more utilities switching from pricier coal to cheaper gas, but it was not expected to be enough to tighten an over supplied gas market.

Production growth is expected to slow this year as low prices hit plans for new drilling, but the sharp decline in the Baker Hughes gas rig count -- down a third since peaking at 936 in October -- has not yet reduced output partly due to increased drilling efficiency.

The gas-directed rig count has fallen in 13 of the last 14 weeks, sinking on Friday to its lowest level in 10 years, but rising output from shale has kept production on an upward track.

US Editor Of The Economist: “Paper Dollar” And “Paper Euro” Will “Debase” In A “Big Way”

In volatile trade in New York yesterday, gold rose sharply prior to falling and ended $4.40 lower or 0.27% and closed at $1,651.70/oz. Gold initially took a dip in Asia and then recovered losses by the time European trading opened and has ticked higher.

Gold’s safe haven appeal is gradually rekindling as concerns deepen about Spain and the other periphery eurozone economies and a realisation that the eurozone debt crisis is far from over.

With the situation in Europe and globally set to deteriorate, the lacklustre demand of recent weeks, particularly in western markets may change to renewed robust physical demand.

There are signs of this already with inflows into gold-backed exchange traded products the most in five weeks last week, and silver holdings in the iShares Silver Trust, the biggest ETF backed by silver, rose 45.3 metric tons yesterday alone to 9,636.69 tons.

Gold 1 Year Chart – (Bloomberg)

This demand should support bullion prices at these levels and there is support at $1,600/oz. There is extremely strong support above the $1,500/oz level after prices consolidated between $1,500/oz and $1,800/oz since last September. (more)

Chart of the Day - PPG Industries (PPG)

The "Chart of the Day" is PPG Industries (PPG), which showed up on Wednesday's Barchart "All-Time High" list. PPG on Wednesday posted a new all-time high of $98.89 and closed up 0.13%. TrendSpotter issued a Buy signal on April 12 at $96.83. In recent news on the stock, Citigroup on April 16 upgraded PPG to a Buy from Neutral and raised its target to $114 from $107, citing the benefits from lower natural gas prices and the improvement in the automotive and aerospace sectors. PPG management on April 5 provided Q1 EPS guidance of $1.75-1.80, which was substantially higher than the consensus of $1.44. PPG Industries, with a market cap of $14 billion, produces coatings, glass, and chemicals.

CHART OF THE DAY: U.S. Debt Greater Than Eurozone and U.K. Combined

from Wealth Wire:

This visual says it all. With America’s debt currently at $15.1 trillion and rising, it’s not a pretty picture.

The worst part is that the Eurozone and the U.K combined – when taking more than six nations into consideration – is still in debt by 2.4 trillion less than the United States is!

If we don’t clean up our act and make immediate changes, we may face Greece’s fate sooner than we think…

VELT flashed golden cross and buy from stochastic

Velti (NASDAQ:VELT) — This Irish mobile advertising and marketing company enables companies to implement campaigns by communicating with their mobile devices. Recent acquisitions and the creation of the Open Device Identification Number (ODIN) Working Group have brought Velti to the forefront of mobile advertising.

The company’s Q4 2011 earnings were 59 cents per share, which beat analysts’ estimates of 48 cents. Analysts expect 73 cents in FY 2012.

The stock broke from a consolidation rectangle in January and established a trendline with support at its 50-day moving average. A golden cross was flashed in April, as well as a buy from the stochastic. The trading target for VELT is $18.

Everyone Is Ignoring One Troubling Statistic About Oil

Few question the prevailing wisdom that tensions with Iran have caused the recent rise in oil prices. But another possibility exists – and it’s a much greater long-term threat to economic growth.

Oil prices last spiked, in 2008, because supply and demand were tightly balanced. Those conditions may have returned, according to Jim Hansen.

Hansen is an independent financial consultant with Ravenna Capital Management in Seattle. His practice focuses on investing in the energy sector, and he distributes a weekly report a broad range of issues related to peak oil.

Over lunch a week ago, Hansen told me that “global spare capacity is approaching zero from a statistical standpoint,” and those conditions are the primary driver of the recent rise in oil prices.

Hansen is not an alarmist when it comes to energy, and doesn’t expect a return to the lines that snarled streets near gasoline stations during the 1973 oil crisis. His analysis is backed by a careful examination of the data. (more)

30 year / 2 year yield curve forecasting deflation event directly ahead?

From Gold Seek / By Gary Tanashian / Tuesday, 17 April 2012

The 30 year / 2 year Treasury yield curve has been on a steady march higher since 2007. This makes sense since that was the year things started falling apart in inflated, debt saturated developed global economies, led by the nation that showed ‘em how it’s done when it comes to economic management by inflation; the US.

When long term yields are rising faster than short term yields, it is a sign of stress building toward either a breakout in inflation expectations or, as has been the case thus far since 2007 (and really, since the age of Inflation onDemand began in 2001), impending reversal of the excesses. Unfortunately, in an age where economies are managed by inflation (by monetization of Treasury/Sovereign debt in service to increasing money supplies) these reversals tend to be shall we say, violent.

Without conjuring too much theory about the Treasury bond market’s yield relationships, let’s just say that a rising curve (top panel) has accompanied ever higher moral hazards being baked into the macro cake. As shown, the monetary value anchor, gold, has moved up right along with the curve. But like the curve itself since the Euro ignited blow off in 2011, Au has been mired in an intermediate down trend. It all makes sense, at least when comparing the yield curve with the monetary relic which has not yet by the way, broken down from what still qualifies as a Symmetrical Triangle, which is usually a bullish pattern.

But enough on gold, it will go up or it will go down in the short term. What we are interested in today is what the yield curve in the top panel may be indicating for the nominal 30 year yield in the lower panel and from there, what the nominal yield may forecast.

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