Dead Cat Bounce for Natural Gas

When you look at the natural gas futures chart over the past month, it is easy to see a "Dead Cat Bounce" literally and figuratively.

The term is used by technical traders to describe the market state after a significant decline. That is what we experienced in the first two weeks of January when prices on the NYMEX dropped from $3.10 mmbtu on January 2nd to $2.32 per mmbtu on January 19th.

Traders look for a bounce after the decline, to see if the stock or commodity has any life. Sure enough, prices did rise to $2.73 per mmbtu on February 25th. Prices subsequently dropped to $2.40 per mmbtu, but recovered to hover right around the $2.50 channel for about two weeks.

On Friday, the cat tail turned up with a cold-weather induced rally that almost reached $2.70 per mmbtu. It looks like the cat survived. If traders feel that there is a bottom to the market, they will return, which may stabilize prices and could push natural gas up from here.

The phrase "Economic Strength" is now being applied to the US economy without any sense of irony. The fact that GM reported a record $7 Billion in profits certainly bodes well for the rust belt states. However, industrial energy demand is still a no-show, which may be the result of the energy efficiency crusade that has been embraced by US industry over the past six years.

Natural Gas Futures Prices

CME-NYMEX natural gas futures market intraday prices for February 20, 2012 at 8:35 AM.
(Prices are USD per mmbtu)

Mar. $2.635 -$0.049
Apr. $2.769 -$0.055
May. $2.876 -$0.050
Jun. $2.955 -$0.055
Jul.  $3.029 -$0.045
Aug. $3.067 -$0.042
PMC 30-Day Natural Gas Futures Chart

Natural Gas Storage is 765 BCF Above Five-Year Average

Working gas in storage was 2,761 Bcf as of Friday, February 10, 2012, according to EIA estimates. This represents a net decline of 127 Bcf from the previous week. Stocks were 817 Bcf higher than last year at this time and 765 Bcf above the 5-year average of 1,996 Bcf. 

Electricity Prices Are Looking Great

All of the Northeastern US prices for electricity are up slightly this morning but remain at 12-month lows.

Crude Watch

The intraday price on the CME/NYMEX market is $105.07, down $1.83 at 7:45 AM. The global crude market is heavy with worry over Iran. The EU cutting off access to SWIFT trading to Iran is an under-reported news item that could significantly cripple Iran's economy by blocking basic banking transactions.

 OPEC Basket Data

Interesting Links and Resources

(Click on Links to View)

20-Year Low for Coal
Natural gas production is hurting the price of coal as utilities opt for the cleaner and cost-competitive fuel.

Talisman Cuts Marcellus Shale Drilling
The Canadian firm seeks higher prices for natural gas.

Jim Steets of Entergy Argues for Keeping Indian Point Running
Entergy president pushes back on efforts to close the Indian Point nuclear facility.

Calpine Seeks Approval for $300-million Natural Gas Generator in Delaware

Salem's Dirty Generator May Become a Clean Natural Gas Facility

Weather Trends
Click on the links below to view the National Weather Service forecasts.