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    Per Roby825:

    Last Post 9670

    .Week Ending...........Degree Days.............Change
    ...06/08/01.........50..(14 hdd, 36 cdd)......+103 BCF
    ...06/21/02.........54..(..3 hdd, 51 cdd)........+95 BCF
    ...06/13/03.........51..(..6 hdd, 45 cdd)......+114 BCF

    ...Baseline (Neutral)...........51....................+110 BCF
    ...Baseline (Backshifted).............................+110 BCF

    ...Basepoint............................110.68 DD
    ...Baseline Slope Estimate.......1.844 BCF pr DD

    This weeks injection was mildly bearish, with the EIA's 114 BCF Injection falling short of both the baseline and the more-important backshifted baseline by 4 BCF.

    Last weeks 125 BCF injection was foot-noted as including an 11 BCF in-ground reclassification of base gas to working gas, meaning 114 BCF was injected. (Hey- I thought 103, EIA said 125, so we split the difference. Just kidding!)

    The year-over-year deficit came down another notch to 696 BCF (was 718 BCF last week), and should continue to ease in the coming weeks.

    The longer-range model continues and will continue its trend towards higher storage projections, with a bearish baseline shift throughout the summer.

    The longer-term models fall 2003 projection rises to 3010 BCF on 10/31 (was 2954 BCF last week) with injection estimates of 86, 66, 56, 55, and 52 BCF for the next 5 weeks (On Degree-day estimates of 52, 61, 66, 70, and 74 respectively, the latter 4 being seasonal norms). That first 86 BCF estimate looks low, however, as gas flows are much higher.

    Spring 2004 storage projection doubles to 250 BCF on 3/27/04 (was 125 BCF last week), implying winter demand on storage of 2.760 TCF (assuming normal degree-day counts). A tremendous amount of uncertainty exists in the 2004 extrapolations.

    Internals however are growing more bearish daily, suggesting the longer-term model is well behind the bearish baseline shift and will continue to trend higher in the weeks ahead (when the gas-flow model is 24 BCF above the longer-term model, it is NOT a good sign!).

    Still, with declining production (from the daily receipts model) and fuel-switching reversals just below par, a 2001-style crash is unlikely, but natgas may go below par (against oil's/oil products btu equivalents) short-term to test demand-reasurrection. If it does, I suspect demand will again rear its head again with a bullish baseline shift, then September new-construction demand kicks in, and up we go... though time (& economy) will tell (This is all speculation on my part, and we remain in bear mode on natgas until the baseline comparisons tell us otherwise).

    Because of increasing risk, I believe natgas futures & options are a "don't own" as the driving mechanisms for further gains in natgas are now gone, Please note this is NOT a recommendation to short/write contracts/buy puts. It is the observation that excessive supply and demand lie in wait just agove and below us, and neither up nor down moves in natgas would be justified by fundamentals.

    Producers would be wise to hedge through October to lock in $6 natgas as probabilities suggest lower prices are much more likely than higher or stable prices. Beyond October is 50/50.

    I am still bullish on E&P's in the intermediate and long term as I don't believe their share prices fully reflect fundamentals. Those E&P's that are unhedged and likely to load up on hedges at this time (like CWEI) still look fundamentally attractive. But even so, it is a good time to lighten up on E&P's (sell 25-50%?) to reduce risk & build buying power (which will come in real handy should natgas prices drop to test demand-reasurrection) and equities follow.

    NEXT WEEKS EIA REPORT: Gas flows indicate 74 BCF injected thus far (through Thursday evening), which would put us on track for a 110'ish build. On NOAA's 52 degree-day estimate for next week, both baseline and ba

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