April 4, 2011 

Cold Spring Heats Up Natural Gas Futures

The April contract for natural gas expired on March 29 at $4.24, up 24 cents during its term. The combination of cold temperatures and a year-long effort by the natural gas industry to dial-back drilling are probably the two leading factors behind the March rally.

Despite the efforts of politicians from both political parties, you can't keep a good country down. Recent trends such as employment and corporate profits have turned cloudy skies blue for bullish economists. President Obama seems to have turned a corner regarding the administration's disdain for natural gas. At a meeting in the Maryland UPS distribution hub last Thursday, he heaped nothing but praise on the alternative fuel experiments of UPS, FedEx and Target, most of which focus on using compressed natural gas for their inter-city routes. Of course, T. Boone Pickens was supportive of the administration's change in tone. Perhaps it was the realization that Secretary Chu's dream of a new nuclear age was just that in the wake of Fukushima. To paraphrase Pickens, natural gas is the only practical choice for curbing global warming while we build a bridge to cleaner, renewable energy.

Natural Gas Futures- Contango Is Looking Good
We extended the futures prices in this issue of the EnergyNews Flash to give you a peek into next winter. While the prices are technically in contango, meaning that they are higher than current spot prices, they represent excellent value if the economy continues to expand. Notice that $5.00 per mmbtu gas is not reached until Jan./12.

CME-NYMEX natural gas futures market intraday prices for April 4, 2011 at 9:15 AM
(Prices are USD per mmbtu)

May. - $4.304 -$0.058
Jun. - $4.260 -$0.057
Jul. - $4.328 -$0.055
Aug. - $4.398 -$0.052
Sep. - $4.432 -$0.049
Oct. - $4.443 -$0.058
Nov. - $4.735 -$0.041
Dec. - $4.976 -$0.034
Jan. - $5.093 -$0.041
PMC 30-Day Natural Gas Futures Chart

Natural Gas Storage Levels Are 68 BCF above 5-Year Average
Working gas in storage was 1,624 Bcf as of Friday, March 25, 2011, according to EIA estimates. This represents a net increase of 12 Bcf from the previous week. Stocks were 12 Bcf less than last year at this time and 68 Bcf above the 5-year average of 1,556 Bcf. The recent warm weather has turned the inventory data to more positive levels than two weeks ago.

Natural Gas Exploration
According to Baker-Hughes, there are 11 more natural gas exploration rigs in the US than the previous week. The total number of rigs at work is 891. That's 58 fewer rigs in action than last year, but 16 more rigs than we had online two weeks ago.

Crude Watch- Libyan Unrest Buoys World Crude Markets
Princeton economist, Alan Binder views the current increase in oil prices as the primary threat to our economy. "No one knows what is going to happen in the Mideast...which creates a pervasive uncertainty." (Bloomberg.com) Binder warns that if oil reaches $150.00 per barrel, the economy will suffer from an oil shock. Binder was Greenspan's chief critic while he was the Federal Reserve Chairman.

But what if things go right for the US during this spring of popular uprisings?  Crude oil prices will sink and economic growth will be positively stimulated not only in the US but worldwide. The US economy will be positively impacted by a global boom which could provide an unexpected boost to earnings for our Fortune 500 companies in late 2011 and early 2012.

Crude oil gets all the headlines. There are other commodities that are still on a tear this year. For example, silver is up 21%. Demand is rising worldwide for just about everything. View the DJ Commodity Index for a snapshot of the long rally. There is probably no better indicator of improved growth and higher prices for goods ahead than today's index and dare we say it, the possibility for an overheated economy and inflation.

Light Sweet Crude (WTI) is trading on the CME/NYMEX market at $108.27 bbl, up $0.33 at 7:55 AM.
 OPEC Basket Data

Electricity Watch
Electricity prices remain stable.


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

Interesting Links and Resources

(Click on Links to View)

American Red Cross  (Japanese Disaster Relief)

Eastern PA Natural Gas Rates To Hold Steady  (Pittsburgh Gazette)

New Hampshire House Committee Could Stall Northern Pass Line (Manchester Union Leader)

NE-ISO:Nice Work If You Can Get It   (Boston Globe)

Republicans Hope to Torpedo Republican Bulb Law (Houston Chronicle)

Lighting the Path Forward for Greater Energy Efficiency (Ecopinion Survey)

Confused about the great bulb debate? Contact us about our LightSavers program. Call us at 585-249-1360.

Weather Trends
The National Weather Service's 6-10 Day Forecast indicates warmer weather ahead. The 8-14 Day Forecasts indicates a cooling trend in New England.

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)