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Category: Investment, Natural Gas
Let's Dispel Market Fallacy: The U.S. Dollar Does Not Drive Natural Gas Fundamentals
By Senior Energy Industry Executive Karl W. Miller
February 4, 2010
Energy Commentary from Karl Miller - Read Bio and More info
Despite all the rhetoric about the risk trade, long commodities, short the dollar, one simple fact holds true.
U.S. Natural Gas is completely decoupled from the Global oil markets, as it is prices on simple supply/demand metrics and not indexed to oil, PPI, CPI, or any other oil based formula.
Additionally, the global ups and downs of the U.S. Dollar and other currency volatility that effect the oil markets and oil related products, should have no effect on the domestic U.S. Natural Gas market
Now, what has happened during the past year is that the hedge funds and financial institutions traders have lumped in natural gas with Oil and other commodities into what the market continues to refer to as the "risk trade".
So, lets exercise and dispel this fallacy once and for all. The U.S Natural Gas sector is "domestic", we import what Mr. would refer to as a "nat on the elephants ass" in LNG, as we simply don't need it.
What drives the U.S. Natural Gas market is winter/summer weather patterns, and the electric power generation industry, as they are the primary consumers of natural gas, as of today.
Smart money knows this and has positioned accordingly.
Investors can follow Senior Energy Industry Executive Karl W. Miller through the following RSS Feed: http://www.investorideas.com/RSS/feeds/Energy.xml
Mr. Millers Office
About the Author:
Mr. Miller is a globally recognized energy executive and institutional investor with a balance of both financial and energy sector expertise. Mr. Miller began his career on Wall Street during the 1980s and has an extensive background in banking, commodities trading and risk management.
Mr. Miller is acclaimed for multiple ground breaking market calls and investments, including the U.K switching from a net gas exporter to a net gas importer in 2000, called the California energy crisis in 2001, called the Ethanol and Bio diesel boom and bust in 2007, called the renewable energy boom and bust cycle underway in 2008, and most recently called the revival of natural gas in the United States in 2009.
Mr. Miller has a long history in the global energy business and has held a variety of executive management positions both within the United States, Europe and Asia. Mr. Miller has bid on over $25 billion in energy related assets during his career.
Mr. Miller has built, restructured and managed energy businesses for major public energy companies on several continents, including PG&E Corporation, Electricitie de France, El Paso Energy, Enron Corporation and JPMorgan Chase.
Mr. Miller holds an MBA in Finance from the Kenan-Flagler Business School at The University of North Carolina, Chapel Hill. Mr. Miller also holds a B.A. in Accounting from Catholic University located in Washington DC.
Disclaimer:
This column, Energy Commentary from Karl Miller, is the opinion of Karl Miller.
Content found in the articles is subject to the terms found in the InvestorIdeas.com disclaimer and does not represent a recommendation of investment advice. Investors should seek the advice of a qualified investment professional prior to making any investment decisions.
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