April 26, 2010

The Forty of April

When you turn on a light, start a car, or hear your furnace turn on, remember that energy never comes cheap. Extracting minerals can be a deadly affair that rocks communities and shatters families. This April, the US energy industry lost 29 miners at the Upper Big Branch mine in West Virginia and 11 offshore-rig crew members on BP's Deepwater Horizon in the Gulf of Mexico. This sad and sobering news is a harsh reminder of the extreme danger that the men and women in our industry face each day. Without their efforts, courage and skill, where would we be as a nation? We pay our respects to the Forty of April and our condolences to the families that have lost a loved one.

Natural Gas Heats Up

Natural gas rallied last week, ending at $4.279 per mmbtu on Friday. Analysts feel that the increase is in response to seasonal maintenance of coal-fired plants. Coal generators use the shoulder months between the heating and cooling system to upgrade, repair and refurbish generation plants. Traders may also be making the bet that this time they'll get it right, and this will be the month that industrial demand blossoms. The activity last week turned a flat trend line slightly positive and technical traders may be anticipating the a "cup-and-handle" chart in the near future, which is customarily a bullish indicator.

Natural Gas Storage Rises

The other side of the story is our very healthy natural gas storage. Analysts were expe expecting 79 bcf in Thursday's EIA Weekly Storage report, but the report recorded an injection of 73 bcf., which may have also sparked some purchasing. Working gas in storage was 1,829 Bcf. This represents a net increase of 73 Bcf from the previous week. Stocks were 95 Bcf higher than last year at this time and 286 Bcf above the 5-year average of 1,543 Bcf. That is 18.5% above the 5-year average which is a significant number so early in the injection season.

Natural Gas Rigs Decline by 17

Baker Hughes reported that natural gas rigs declined by 17 (4/6/10) compared to the previous week. This is the first significant downtick in rig activity this year. Natural gas producers would like to see fewer production wells in shale structures to help cut supply and support higher prices. We attribute the ready supply of natural gas from new shale wells as a key factor in keeping natural gas prices low over the past six months. If the rig rate plateaus, there will be pressure on prices as a production floor is established.

Natural Gas Market Watch- Intraday Prices Snapshot
Here are the intraday prices on the CMEG/NYMEX electronic market today (Monday) at 10:44 AM for the next six months($ per mmbtu, intraday prices):

May. $4.198 -0.059
Jun. $4.284 -0.059
Jul. $4.399 -0.054
Aug. $4.492 -0.050
Sep. $4.542 -0.051
Oct. $4.654 -0.050

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

Crude Oil Watch
NYMEX Crude front month future is down $0.52 to $84.60 at 10:44 AM.
West Texas Cushing traded up $0.55 to $84.97 per bbl at 9:14 AM.
 OPEC Basket Data
 
Electricity Watch-
Electricity for all Northeast markets is beginning to trend up with natural gas.
For more information view the Day Ahead Electric pricing data charts from the PMC database, updated every Monday.

Weather Trends-
09-2010.
NOAA Forecast for Next Week
8-14 Day forecast
NOAA Forecast- 30-Days
El Nino-La Nina (Pacific Ocean Temperature Levels)
Arctic Oscillation (Arctic Pressure Patterns)

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.