Jan. 18, 2010

Warm Weather Keeps Natural Gas and Electricity Prices Down
Despite the 266 BCF of natural gas pulled from storage two weeks ago, natural gas prices are declining in response to the predicted above-average temperatures over the next two weeks in the Great Lakes and Northeast. The bulls in the markets were anticipating a much larger inventory reduction figure. When they didn't get it, they had to cover their bets, which also helped pull prices down. Working gas in storage was 2,852 Bcf as of Friday, January 8, 2010, according to EIA estimates. Stocks were 103 Bcf higher than last year at this time and 121 Bcf above the 5-year average of 2,731 Bcf.

Natural Gas Exploration- Up 62 Rigs Over Two Weeks
According to Baker-Hughes, there were 811 active natural gas rigs in the US as of last week with 30 additional rigs more than the previous week. There are 424 fewer rigs in operation last week than last year at this time. The exploration trend has been positive since July 17th of this year.

CFTC Gives Wall Street A Victory Over Mill Street
In a much anticipated action, Gary Genstler, the director of the Commodity Futures Trading Commission, announced new trading limits for extremely large traders who hold more than 10% of an energy commodity. The action will be open for public commentary for the next 90-days before being implemented. In total, no more than six companies are expected to be affected by the new control.

It appears that Wall Street has won another victory over Mill Street with this ruling. US industrial companies wanted the CFTC to provide regulations that would wring speculation out of the energy commodity markets. Industry groups petitioned the CFTC with statements asserting that stable energy pricing is important to manufacturers and that energy futures should not be subject to speculation. The original concept of a plain vanilla future was to help companies reduce risk over time. By opening energy trading to speculators, artificial market manipulation is much more likely to transpire, which was seen in the 2006-2008 markets. Energy futures can also become parts of sophisticated derivative formulas which are difficult to value correctly and can fail dramatically as in the cases of Amaranth and Bear Stearns.

The CFTC ruling as it stands will keep the energy speculators in business and provide no real protection for industrial users of energy who are only just beginning to recover from the trader-induced meltdown.

Pennsylvania's Rate Cap Expiration May Cause 30% Increase in Electricity Prices in Some Areas
On Jan. 1, 2010, Pennsylvania energy consumers will be looking for alternative electricity providers. The cause of the rate hike is the elimination of a rate cap on generation first imposed in the mid-90s. Exelon's PECO and Alleghany Energy will have their generation caps lifted on the first of January in 2011. Power Management Company will provide an energy solution for Pennsylvania companies affected by the rate cap expiration.

Natural Gas Market Watch - Intraday Prices Snapshot
Here are the intraday prices on the CMEG/NYMEX electronic market today (Monday) at about 9:50 AM for the next six months ($ per mmbtu, intraday prices):

Feb. 2010 $5.582 +0.103
Mar. 2010 $5.565 +0.102
Apr. 2010 $5.536 +0.100
May. 2010 $5.601 +0.080
Jun. 2009 $5.667 +0.080
Jul. 2010 $5.750 +0.081

Natural Gas Futures:
PMC 30-Day Natural Gas Futures Chart

Crude Oil Watch
NYMEX Crude front month future is up $0.34 to $78.34 at 9:13 AM.
West Texas Cushing traded down $1.38 to $78.34 per bbl at close last Friday.
 OPEC Basket Data
 
Electricity Watch-
Electricity is rising slightly on the Day Ahead Market today for NYISO C and ISO NE.


For more information view the Day Ahead Electric pricing data charts from the PMC database, updated every Monday.
Weather Trends-
According to NWS maps, the Eastern US will have warmer than average weather over the next two weeks. The Arctic Oscillation has swung dramatically to the positive level.
inter 2009-2010.
NOAA Forecast for Next Week
8-14 Day forecast
NOAA Forecast- 30-Days
El Nino-La Nina (Pacific Ocean Temperature Levels)
Arctic Oscillation (Arctic Pressure Patterns)

Written and Researched by Martin Linskey; Energy Charts developed by Charles Myers.

Disclaimer: This information is provided for the use of our customers and potential customers. Power Management Company assumes no responsibility or liability for the accuracy or completeness of pricing or information in this document. Historical data was obtained from sources that we believe to be reliable, but we do not guarantee its accuracy or completeness. It is not intended to provide advice or recommendation. Views are subject to change without notice.