Dec. 21, 2009

Snow Storm Sends Energy Prices Soaring

A colder than average forecast for the entire Eastern US has ignited natural gas prices in the US over the past four days. It also spurred a chart crossover. Click on the Natural Gas Futures chart above to view a classic crossover of current prices rising above prices from last year.

For those who are chart fundamentalists, the impetus for the crossover may be viewed as a technical rally that was fueled by a cup and handle formation that started forming on 11/27/09 and was completed on 12/8/09, which is a bullish indicator for prices.

For those who follow market fundamentals, the cause of the current uptrend is supply and demand; temperatures are falling and the economy is beginning to rise, which should theoretically increase demand. Regardless of whether you are a fundamentalist or a "supply and demander", there appears to be a steady trend up for energy prices. The question we ask is simple: is this end of cheap energy prices, the only silver lining of the recession?

Copenhagen Climate Change Agreement Fizzles Out
China and the United States managed to sidestep any meaningful progress in global climate change policy. China opted to protect its right to pollute by stonewalling inspections and any potential punitive actions for failing to meet self-imposed national standards.

President Obama's team returned claiming what looks like a pyrrhic victory. They claim that there is now a global agreement to control climate change and a pledge to provide aid to developing countries, but neither concept seems set in stone or have any punitive measures to drive enforcement.

It is too early to say that the meeting was a complete failure, but several conference leaders expressed open disappointment. Lumumba Stanislaus Dia Ping, from Sudan, which is chairing the Group of 77 and China bloc of 130 poor nations, condemned the deal: ''Today's events really represent the worst developments in climate change negotiations in history.'' (Sydney Times, 12-21-09)

According to Bloomberg.com, Nobel Prize winner, Joseph Stiglitz said the Copenhagen climate-change agreement was a "great disappointment" because it lacked a framework to cut carbon-dioxide emissions blamed for global warming. (Bloomberg.com, 12-21-09)

Chilly Temps Spur Big 207 BCF Natural Gas Inventory Withdrawal
Working gas in storage was 3,566 Bcf as of Friday, December 11, 2009, according to EIA estimates. This represents a net decline of 207 Bcf from the previous week. Stocks were 381 Bcf higher than last year at this time and 433 Bcf above the 5-year average of 3,133 Bcf.

Natural Gas Exploration Trending Up
According to Baker-Hughes, there were 773 active natural gas rigs in the US as of last week with 16 additional rigs more than the previous week. There are 593 fewer rigs in operation last week than last year at this time. The exploration trend has been positive since July 17th of this year.

Natural Gas Market Watch- Intraday Prices Snapshot
Here are the intraday prices on the CMEG/NYMEX electronic market today (Monday) at about 10:00 AM for the next six months($ per mmbtu, intraday prices):

Jan. 2010 $5.671 -0.111
Feb. 2010 $5.714 -0.115
Mar. 2010 $5.684 -0.121
Apr. 2010 $5.640 -0.138
May. 2010 $5.682 -0.116
Jun. 2009 $5.720 -0.133

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

Crude Oil Watch
Unrest in Iraq and Nigeria are pushing crude oil higher today.
West Texas Cushing traded up $0.45 to $73.81 per bbl today at 9:05 AM.
NYMEX Crude front month future is down $0.86 to $74.22 per bbl at 10:42 AM today.
 OPEC Basket Data
 
Electricity Watch-
Electricity is soaring on the Day Ahead Market today. It is up to the $80 per MWH range this morning for the ISONE; just over $70 per MWH for PJM; while the ISO NY prices are bouncing around $60 per MWH.

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 colder than average weather over the next three weeks.

According to NOAA, El Nino is expected to continue strengthening and last through at least the Northern Hemishphere Winter.
inter 2009-2010.
NOAA Forecast for Next Week
8-14 Day forecast
NOAA Forecast- 30-Days
El Nino-La Nina (Pacific Ocean Temperature Levels)

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.