February 21, 2011

Spot Natural Gas Is Normalizing but Temperatures May Be a Different Story

The volatility in the natural gas spot market for the NY Citygate seems to be taking a breather. This may be a brief respite. The weather forecast for the next two weeks is simply more of the same chilly air sweeping across the Midwest. The tea leaves indicate that we may have more volatility ahead.

Natural Gas Futures Trending Down

In the natural gas futures market, front month prices are dropping. At 10:00 this morning, natural gas prices reached $3.915; down $0.039. Natural gas was trading close to $4.90 per mmbtu just four weeks ago. That is a substantial 21% decline in front month future prices.

Natural Gas Storage Declines by 233 BCF

Working gas in storage was 1,911 Bcf as of Friday, February 11, 2011, according to EIA estimates. This represents a net decline of 233 Bcf from the previous week. Stocks were 141 Bcf less than last year at this time and 128 Bcf below the 5-year average of 2,039 Bcf. In the East Region, stocks were 135 Bcf below the 5-year average following net withdrawals of 118 Bcf.

With stocks in the East Region below average, another cold wave could ignite spot prices for both electricity and natural gas. The question is how frigid will the upcoming cold wave be as it sweeps across the country?

Natural Gas Futures

CME-NYMEX natural gas futures market intraday prices for Feb. 21, 2011 at 10:00 AM
(Prices are USD per mmbtu)

Mar. - $3.915 +$0.039
Apr. -  $3.945 +$0.039
May - $4.009 +$0.033
Jun. - $4.068 +$0.031
Jul. -  $4.125 +$0.030
Aug. - $4.156 +$0.031

PMC 30-Day Natural Gas Futures Chart

Crude Watch- Libyan Unrest Driving Up Prices

Light Sweet Crude (WTI) is trading on the CME/NYMEX market at $90.19 bbl, up $3.99 at 8:41 AM.
 OPEC Basket Data

Electricity Watch

For more information view the Day Ahead Electric charts from the PMC database, updated every Monday.

Interesting Energy News and Resources (Click on Links to View)

PECO Seeks Slight Increase  (Philadelphia Business Journal)

Energy Grants Dry Up in Ohio  (Forbes)

Chevron's Marcellus Shale Deal for Atlas Energy is Finalized  (WSJ Online)

US DOE Lays Groundwork for NJ's Offshore Wind Farm  (NJ.com)

MIT Energy Site   (Link to MIT's Energy Initiative)

Weather Trends- Keep Shovels At Hand
The National Weather Service's 6-10 Day Forecast shown below indicates that much of the Northeast will have close to average temperatures over the next ten days. The troublesome jet stream is pouring cold air right down the spine of the Rockies. If the predictions are accurate, that cold air may come straight across the Midwest to the Northeast.

6-10 Day forecast
8-14 Day forecast
NOAA Forecast- 30-Days
El Nino-La Nina (Pacific Ocean Temperature Levels)
Arctic Oscillation (Arctic Pressure Patterns)
Jet Stream Forecast (SFSU)