November 9, 2009

Hurricane Ida Causing No Ripples in Natural Gas Markets
As Hurricane Ida hits Louisiana as a Category II storm, the natural gas market is indicating that it is not worried about the impact on Gulf production. Some meteorologists anticipate that it will quickly weaken to tropical storm status. The hurricane season typically ends this month, which, if Ida is the last storm, will make this one of the mildest hurricane seasons in three decades. NOAA predicted in June that this would be a milder than average hurricane season and they seem to be right on the mark.

Natural Gas Storage
Another reason that traders are so unconcerned about Ida is the positive news regarding natural gas storage. Working gas in storage was 3,788 Bcf as of Friday, October 30, 2009, according to EIA estimates. This represents a net increase of 29 Bcf from the previous week. Stocks were 379 Bcf higher than last year at this time and 414 Bcf above the 5-year average of 3,374 Bcf. It is always bullish to open the official heating season with a healthy injection of almost 30 BCF. The NOAA forecast is also piling on the good news with predictions of continued warmer than average weather in the Northeast over the next three weeks. It is also not suprising that electricity is also slumping in price.

Natural Gas Exploration
There appears to be a very slight trend up in the number of natural gas drilling rigs in the United States. Generally, any new rigs will probably be unconventional natural gas rigs which have proven to be above average producers. Current rig levels have declined to 2002 levels.

We are paying close attention to exploration in the Marcellus Shale area. In New York State where production has been on hold for almost a year, only three natural gas wells were drilled; whereas Baker Hughes reported that Pennsylvania had 59 drilling rigs and West Virginia had 22 rigs. (Chart: BakerHughes.com)

Below is another interesting chart from the Baker Hughes site that demonstrates graphically the productivity of recent natural gas wells. Notice the steep decline in drill rigs while natural gas production remains almost unchanged.

Natural Gas Market Watch- Intraday Prices Snapshot
Prices have declined less than two cents today in intraday trading on the CMEG/NYMEX. The trend has been down since the middle of October.
Here are the intraday prices on the NYMEX electronic market today (Monday) at about 11:03 AM for the next six months($ per mmbtu, intraday prices):

Dec. 2009 $4.577 -0.018
Jan. 2010 $4.940 -0.019
Feb. 2010 $4.994 -0.028
Mar. 2010 $5.011 -0.025
Apr. 2010 $5.016 -0.030
May. 2009 $5.077 -0.029

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

Crude Oil Watch
West Texas Cushing traded up $1.63 to $79.06 per bbl today at 10:43 AM.
NYMEX Crude front month future is up $1.65 to $79.08.41 per bbl at 9:09 AM today.
 OPEC Basket Data
 
Electricity Watch-
Northeastern electricity prices are ranging from $35.00 per MWH to $42.00 per MWH this morning. The short term trend is down.
For more information view the Day Ahead Electric pricing data charts from the PMC database, updated every Monday.
 
Weather Trends-
The Northeastern US will be unseasonably warmer over the next three weeks.
NOAA Forecast for Next Week
8-14 Day forecast
NOAA Forecast- 30-Days

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.