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john galt's avatar

Unfortunately I remember it too well, as I was paying 23% on a bank loan for options that gave me a hard lesson in rolling the dice. Since then, gold, silver, uranium, and some other commodities stocks. Has been a long hard drag, but finally my ship is coming in. Sadly, as I always told my grown kids and friends, when I do exceedingly well, the country, and perhaps world, will be in crap city. I am not a seer, simply educated enough to understand economics and politics and human nature.

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Fast Eddy's avatar

Unlike the 70's....

Conventional oil production peaked nearly 20 years ago, we have been desperately cannibalizing nuclear war heads to fuel reactors, and shale oil production is now declining. Renewable energy is nothing more than a mirage of hopium.

The fourth horseman of the apocalypse is now mounted - natural gas production is contracting.

Natural Resources Market Commentary - Q3 2024

Goehring & Rozencwajg Natural Resource Investors

In the volatile world of U.S. natural gas, the past quarter unfolded with all the drama of a Shakespearean act. Prices began at a modest $2.60 per Mcf, buoyed by the quiet equilibrium of early spring. But by mid-June, the plot had transformed. An unseasonal heat wave gripping the central United States sent prices soaring to $3.15, a rally that spoke as much to the market’s sensitivity as it did to the hot weather. Yet, as quickly as the heat arrived, it receded. Milder temperatures reclaimed the stage and gas prices tumbled in response, bottoming at $1.90 by the end of August.

While market participants obsessed over weather patterns, few paused to consider the silent protagonist in this unfolding drama: inventories. The 2023–2024 winter, among the warmest on record, left a legacy of near-record storage levels. At the outset of the injection season, inventories stood at a staggering 700 Bcf—or 40%— above the ten-year average. Yet, tight fundamentals have nearly erased this surplus in a remarkable turn. Over the third quarter alone, inventories were drawn down by almost 400 Bcf. By quarter’s end, storage levels stood less than 5% above the norm, a quiet but profound shift that few have fully grasped.

This brings us to the present moment, where the market stands at a crossroads. If the coming winter delivers typical cold—after two years of unseasonable warmth—U.S. natural gas prices could well align with international benchmarks which currently hover near $14/MMBtu. The implications are vast, mainly as U.S. natural gas production, once seemingly boundless, now hints of rolling over.

Over the past fifteen months, growth in U.S. gas production has stalled. Indeed, in the past seven months, production has begun to contract. Since peaking in December 2023, U.S. dry gas supply has fallen by 3 Bcf per day—a 3% decline. Year-over-year data tells a similar story, with dry gas production now down by 1.2 Bcf per day, slightly more than 1%.

More https://fasteddynz.substack.com/p/natural-gas-production-is-contracting

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