July 6, 2009

Remember Last Year When Natural Gas Was Just 13.577 per mmbtu?

Today natural gas is more than $10 less per mmbtu. than it was on July 3, 2008. On July 17, we called the price of natural gas a sign of a Black Swan event in our PowerNews Energy Update. In fact, July 2008 was the beginning of the great unwinding, which is only now slowly beginning to reverse course.

Everyone knows that increased economic demand in the US will drive energy prices up. The problem is that there is no concrete sign of industrial demand returning in the economy over the next three months. Businesweek makes a strong case for depleted inventories that have to be replaced, but there is no indication yet of a flood of new industrial demand, or consumer demand. In fact, the spike in gasoline supplies indicates that the US consumer is not heading off on the legendary road trips of yore. According to the EIA, June's total daily gasoline use in the U.S. averaged over the four weeks ended June 26 was down 5.8 percent from a year earlier. Putting on the rose-colored glasses, maybe gas consumption being down less than 6% in this economy is a bullish indicator.

Natural gas is also declining this morning at 11:15 to $3.495 per mmbtu on NYMEX; down $0.12. The Camelot Effect has hit most of the Northeastern US and Upper Midwest with below average temperatures while high heat is present in the South and most of the West where extremely cheap natural gas is plentiful.

Natural Gas Exploration
US natural gas producers are still busy idling rigs- over 851 over the past 12 months, leaving us with 688 working rigs as of last week per Baker Hughes. That's a 56% decline in production drilling.

Natural Gas Storage
Working gas in storage was 2,721 Bcf as of Friday, June 26, 2009, according to EIA estimates. This represents a net increase of 70 Bcf from the previous week. Stocks were 615 Bcf higher than last year at this time and 467 Bcf above the 5-year average of 2,254 Bcf. This represents 13.6% of total anticipated annual natural gas consumption in storage of 20 Tcf., five months before the start of the heating season.
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 six months($ per mmbtu, intraday prices):
Aug. $3.495 -0.120
Sep. $3.625 -0.132
Oct. $3.853 -0.143
Nov. $4.535 -0.157
Dec. $5.258 -0.134
Jan. $5.582 -0.125

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

Crude Oil Watch
West Texas Cushing traded down $2.94 to $63.79 per bbl today at 9:04 AM.
NYMEX Crude front month future is down $2.48 to $64.25 per bbl at 9:52 AM today.
 OPEC Basket Data

Electricity Watch
Last year, the Day Ahead Electric price for NEISO and PJM were both at $145.00 per MWH; today they are $37.63 per MWH. NYISO Zones A, B and C are all below $35.00 per MWH; last year they were hovering around $100.00 per MWH. The silver-lining in the downturn continues to be energy prices.
For more information view the Day Ahead Electric pricing data charts from the PMC database, updated every Monday.
 
Weather Trends
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.