What the frack?!

Natural gas inventories came in Thursday morning showing the anticipated build … and then some.

There is now 74 billion cubic feet of stockpiles to be exact.

The future – the long-term future – is bright for natural gas. It appears to be the energy of the future, but few operations around the world want to invest in flipping the switch on a new gas-fired plant during a time of economic malaise.

And, the over-supply story of a commodity (the nat gas commodity) springs from one of the dustiest of economic textbooks. With shale gas being found in pockets all over the United States these inventory reports each week carry a fraught under-story. Even if the process of fracking is not employed and the gas stays in the ground, it is ready and waiting like a preteen at the dance.

No anxiety of ‘peak gas’ to fuel prices.

In the immediate future - as we consult the Farmers’ Almanacs – it appears the tail end of the 2011 winter could be milder than previously thought. And that is making the price spread between March and April futures widen. The concern is that we’ll see inventories at winter’s end grow more than expected.

Enter the speculative traders, who bet mostly on nat-gas prices going south. Until the speculators take the opposite tack and the winter’s winds encourage us to crank up the heat, on Thursday mornings we are likely to report one build after another.

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