WaveStrength Material Profits for November 07, 2006
My Short-Term Prediction?
By Sara Nunnally
Along with oil’s slight loss, heating oil shed two-and-a-half cents today, dipping below $1.70 a gallon.
Natural gas, on the other hand, is rising up more than a quarter. I think natural gas is currently a good leading indicator for what heating oil will do.
On September 25, heating oil, natural gas, and crude oil all registered about a 20% loss since July 19. Natural gas has been the first to respond, and is now starting to trend higher.
Heating oil and crude are trading in lockstep but have not yet turned higher.
One reason why is because our heating oil stores as of October 27 were 20.4 billion barrels higher than they were last year. Production is also up 382,000 barrels compared to last year.
This could be just a short reprieve, though, as demand is also climbing, and winter has come upon us a bit quicker than last year. Heating oil stocks, though up compared to this time last year, were down compared to last week.
Colder weather has increased demand. In the natural gas sector, we saw a draw down in stocks. It was the earliest weekly draw down in natural gas stocks since 1994.
Previous years saw an increase in natural gas stores.
New numbers come out tomorrow at 1:00 p.m. EST on the Energy Information Administration’s Web site for both heating oil and natural gas.
My short-term prediction? Well, since oil and heating oil follow the same path, and winter’s practically here, of course my bet is on heating oil to rise.
I think we’ll see heating oil at $1.90 per gallon by the end of the year.
While I’m at it, natural gas could hit $9 per thousand cubic feet by the end of the year.
That’s all for today. If you want me to try forecasting a specific commodity’s end-of-the-year price, send me an e-mail at wavestrength@taipangroup.com with the subject, “Commodity Forecast.”