Is Natural Gas Finally Going to Find a Floor?
The nation's natural gas supplies fell last week, the government said Thursday, prompting the “Fast Money” traders to debate whether the price of nat gas could finally find a floor.
The Energy Department's Energy Information Administration said in its weekly report that natural gas in storage shrank by 1 billion cubic feet to 3.851 trillion cubic feet for the week ended Nov. 25. Analysts expected an increase of 9 billion to 13 billion cubic feet, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. The inventory level was 7.3 percent above the five-year average of 3.590 trillion cubic feet, and 1.1 percent above last year's level of 3.810 trillion cubic feet, according to the government data.
Natural gas rose 9.8 cents to end the day at $3.648 per 1,000 cubic feet.
To renowned commodities trader Mark Fisher, nat gas levels are approaching a level of “ridiculousness.” Natural gas is used to heat homes, so Fisher thinks demand could increase when winter weather strikes in the next four weeks or so. So nat gas could soon find its bottom, said Fisher, founder and CEO of MBF Asset Management.
Fisher is currently one of the biggest traders on the NYMEX. At age 21, he became the youngest trader ever in the silver futures pit and was the world's largest gold trader from 1978-1988. He appeared on CNBC Wednesday.
Like Fisher, trader Dan Dicker also thinks nat gas prices are incredibly inexpensive right now.
“It is ridiculously cheap. I mean, nat gas could easily double in price and still not get to historical correlation where it should be to crude oil,” said Dicker, president of MercBloc, a wealth management firm, adding that nat gas prices do tend to pop once winter weather rolls in.
Veracruz founder Steve Cortes agreed nat gas is susceptible to a weather rally, but he doesn’t think it would be long lasting. He warned there is a “real danger” in getting long natural gas because the Republicans could win the 2012 elections, prompting a major increase in drilling for the fuel that would cause prices to remain low. Dicker agreed, adding it would be “frack central” if the Republicans win the November elections. Long-term then, Dicker doesn’t think nat gas will exceed $6 per 1,000 cubic feet.
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Trader disclosure: On Dec. 1, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Seymour is long AAPL; Seymour is long BAC; Seymour is long INTC; Seymour is long CSCO; Seymour is long F; Adami owns C; Adami owns GS; Adami owns INTC; Adami owns BTU; Adami owns MSFT; Nathan has long Dec puts AAPL; Nathan has Jan puts BAC; Nathan has Jan puts MS; Nathan has Jan calls NFLX; Nathan has Dec calls RIMM; Nathan has Dec puts GMCR; Finerman owns BAC; Finerman’s firm has short calls AAPL; Finerman’s firm has leans & calls JPM; Finerman’s firm has short calls IBM; Finerman’s firm owns M; Finerman’s firm owns TGT; Finerman’s firm owns BKS; Cortes is long Treasuries; Cortes is long SO; Cortes is long SVU; Cortes is long DEO; Cortes is short EUR; Cortes is short AUD; Cortes is short MXN; Cortes is short GBP; Cortes is short DB; Cortes is short QQQ; Stutland is long T and short calls; Stutland is long AAPL stock and short calls; Stutland is long WMT stock and short calls; Stutland is short DIA puts; Stutland is short TLT puts; Stutland is long US treasuries TIPS; Biggam has options position in C; Biggam has options position in JPM;
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CNBC.com with wires.