March 30, 2009

Weak Demand and Early Storage Injections Keep Natural Gas Prices Anchored Near Seven Year Lows
Last week, natural gas prices declined by more than 16 percent in three days to end the week, settling Friday at $3.631 per 1,000 mmbtu. You would have to go back all the way to Sept. 26, 2002 to match that price. The prime suspect is the continued decline in industrial demand across the United States. The expectation is that natural gas will trade sideways until there is some increase in demand, which is probably not going to be provided by the weather; or industry considering the plight of the auto sector.

Analysts view the price of natural gas as a better reflection of market fundamentals since it attracts fewer speculators than crude. The consensus is that crude oil prices will follow natural gas prices down, which is a change of behavior if it happens.

Natural Gas Exploration Still Declining
Baker Hughes Inc. reported Friday that drilling projects are still trending down. The number of rigs actively exploring for oil and natural gas in the United States fell for the 10th straight week. The 1,039 rigs are the fewest in operation since at least January 2004.

Natural Gas Surprises Analysts with Injection Data
Working gas in storage was 1,654 Bcf as of Friday, March 20, 2009, according to EIA estimates. This represents a net increase of 3 Bcf from the previous week. Stocks were 372 Bcf higher than last year at this time and 280 Bcf above the 5-year average of 1,374 Bcf.

Natural Gas Market Watch- Intraday Prices Snapshot
Here are the intraday prices on the NYMEX electronic market today (Monday) at about 11:25 AM for the next five months($ per mmbtu, intraday prices):

May.-09 $3.761 +0.024
Jun.-09 $3.871 +0.024
Jul.-09 $4.040 +0.020
Aug.-09 $4.115 +0.004
Sep.-09 $4.166 -0.013

Natural Gas Futures:
PMC 30-Day, 90-Day, 12-month Natural Gas Futures Chart

Crude Oil Watch
West Texas Cushing traded down $1.99 to $50.39 per bbl this morning at 9:08.
NYMEX Crude front month future is down $2.19 per bbl this morning to $50.19 at 10.38 AM.
 OPEC Basket Data

Electricity Watch
Northeastern electricity prices are tracking in the $35 and $45 per MWH channel. NYISO A actually diverged from the pack to dip into the teens last week. Review the historic trends for key electric markets in the Northeast with the Day Ahead Electric pricing data charts from the PMC database, updated every Monday.
 
Weather Trends
According to the National Weather Service, seasonal weather is expected through most of the US with intermittent warm bands in the north and the south. The big issue will be precipitation in the midwest.
 
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.