February 03, 2010
| about stocks: CHK, RRC, APA, APC, DVN, OXY, XOM, XTO, CVX, BP, WMB, EP
Mr. Miller issued a Buy Opinion on the entire natural gas producer sector on February 3, 2010 and promised to do a follow up analysis on the sector. Unfortunately, the extreme winter weather beat him to the punch.
Immediately after issuing a full blown buy opinion on the natural gas sector, Mr. Miller went right to work looking for every reason that he could be wrong, including re-evaluating supply, storage injections, mainline pipe and distribution, demand forecasts and most importantly weather.
Mr. Miller notes that you can't hedge political risk, but as he has pointed out recently, and made the call on, Cap and Trade and emissions legislation is dead, and from a political perspective, natural gas is the winner.
After all, Mr. Miller is a risk manager and trader by training, and always looks to the "trade to worst scenario" and has factored in the hedge fund short positions in the Nymex futures and options, as well as studied the short interest and options open interest on the major natural gas producer stocks.
To cut to the chase, the bottom line is that the shorts don't have the capital or staying power to continue to suppress Natural Gas and producer stocks given the continued extreme weather and political changes that have occurred.
We are after all, in the middle of the worst winter in over 15 years. Things are just starting to get interesting in the Natural Gas sector. Finally, as Mr. Miller has pointed out on numerous occasions, the market is also not factoring in the appropriate volatility and demand for the summer of 2010, and when combined with the current conditions, we are going to see a major upswing in Natural Gas on purely fundamental reasons, and then a further push upward as the hedge funds are blown out of their stop losses on their short futures and short stock positions in the natural gas sector.
The exponential factor of fundamental buying and short covering will drive Natural Gas to $7/mmbtu in February. The spot gas market is expected to spike many times that price at multiple city gates (delivery points) as the mainline pipes become full and compression is challenged.
Senior Energy Industry Executive and Institutional Investor Karl W. Miller Issues Buy Opinion on "U.S. Natural Gas Producers"
By Senior Energy Industry Executive Karl W. Miller
February 3, 2010
about stocks: RRC, CHK, DVN, APC, APA, MRO, XTO, XOM, CVX, OXY, BP, WMB, EP
For public interest, Mr. Miller has issued a "buy opinion" on the entire U.S. Natural Gas Production Sector.
Mr. Miller issues his buy opinion following formal signals from Washington, that the Obama administration has capitulated on the flawed "Cap and Trade" plan.
In simplistic terms, Natural Gas Producers win in all outcomes given the fundamental industry changing events, which will change the landscape of the U.S. Energy complex for many years to come.
Mr. Miller notes fundamental demand increase in the U.S. Industrial base, extreme weather condition expected to persist over the next six weeks, will also benefit the natural gas producer sector, in addition to industry consolidation which will add premiums to the entire producer sector.
Mr. Miller will publish a more detailed investment note later this week.