Natural Gas Could Test Lows on Warm Weather: Shover

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Jan. 14 (Bloomberg) -- Bloomberg’s Julie Hyman and Larry Shover, chief investment officer at SFG Alternatives, look at the natural gas market on today’s “Futures In Focus” on Bloomberg Television's "In The Loop."

You look at the weather that we have had, it is natural the stock piles have been drawn down because it has been so cold.

What happens now?

It is what happens at the end of the winter and summer.

Historically the week of january 20 is the coldest week in north america.

Perhaps it will be colder and stocks will be drawn down further reading pressure on natural gas.

However, if we normalize, we could see natural gas slip a low the four dollar mark, maybe evening testing, switching parity levels in the mid- atlantic states.

I am curious what is happening on the supply front -- i should say on the production front.

There we are seeing a lot of new production from the u.s., from the shale formation.

What is the latest on the supply and production situation?

Supply overall very good but short term is very bad because we have had well freeze off.

So much of the natural gas used to come from warmer regions.

So much coming from south and north dakota and canada.

That has stalled production.

For cubic feet per day.

All the while, a record amount of demand.

It is not good at math.

Inventory has been drawn down a lot more quickly than expected.

It is keeping the market very vulnerable.

Freeze offs.

What exactly happens?

To whether gets so cold they cannot get the natural gas out of the ground?


When you have a wellhead and temperatures around it are below freezing, they can heat that that there is water combined with that so it freezes and taxes the infrastructure.

A lot harder in slow work to get out of the ground.

A lot of production growth coming out of the regions, but the phenomenon given the amount of gas coming from the region.

Also given just how cold it has been.

Also something i want to talk about that is a longer trend is utility switching to gas run cold.

Where are we in that cycle and how is that affecting the natural gas market?

That is really interesting.

It seems to be switching utility should be driven by economics.

Whatever is cheaper, that is what they will use.

There seems to be a developing theory that utilities as long as they can will tend to use natural gas because of the bad politics surrounding coal.

That will put more taxation on demand.

Thank you for talking to us about natural gas.

More on the markets in 30 minutes.


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