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0 Apr 21 2010 @ 10:55am by Matt Smith in Natural Gas, risk management

US natural gas through the medium of the Hoff

So it hit me like a thunderbolt. It was after a recent bout of analysis that I came to the staggering realization that US natural gas has many similar attributes to the career of the man, the myth, the legend that is David Hasselhoff (‘the Hoff’). Through the years we have laughed, cried, and scratched our heads at the Hoff, a set of emotions not dissimilar from the ones evoked by the US natural gas market. So forthwith, I present my steadfast case.

First up to the stand, Knight Rider. After the blow-up by natural gas in the last year and a half, the face of the gas market has been drastically changed – much like Michael Knight’s. With new supply from forces such as LNG and shale coming to the fore, natty is left to battle against potential oversupply, while hoping industrial demand will continue to gather pace. Much like our quaffed hero, natural gas is not necessarily battling against other adversaries (although coal switching is a current consideration): changing dynamics make it it’s own worst enemy, like Michael’s nemesis Garthe Knight. And the kicker to all this – Michael is a man close to my heart, leaning on technical analysis (of a different kind) through his car and sidekick KITT (Knight Industries Two Thousand….I never realized…Wikipedia wins again…). 

Prior to the aforementioned blow up (-> -> $2.40), natural gas had been living to excess, partying like a rock star, and running up to $13.70. This parallels with another point in the Hoffmeister’s life. But as improving economic data attest, a return to form for natural gas may see it back under the spotlight and very much in demand again (regardless of T Boone and his natural gas wacky races). And like our dearly beloved commodity, the Hoff is also ready to rock on once again (in the night, presumably). 

The third and final serendipitous era of Mr H which ties to the good ship natural gas, is his period as lifeguard Mitch Buchannon. Life for natty, just as for Mitch, is never plain sailing, with storms (literally) seemingly always on the horizon. And just as hurricane season appears on our radars,  we have to recognize that this is a natural part of our commodity’s yearly life cycle, and is as much a mainstay as Mitch was to Baywatch. All we can do is manage our risk against these possible eventualities, as situations can turn fast. (and we can’t all move in slow motion…along a beach…with a flotation device…).

So where does this all leave natural gas? Basically, in a similar position to the Hoff. It has been down and out, but is gritting its teeth and is ready to show us what it is made of. Just like you can’t keep a good man down, natty is ready for a scrap. But it can be safe in the fact there will always demand for such a unique commodity. It’s been emotional.

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