fmx | energy | connect - Gas Petrospective

Categories:

Tools

FMX 2010 Energy Expiration Calendar

follow FMX on

Data Reports:: market snapshot; energy >> crude report; energy >> options report; energy >> natural gas report; commodities >> metals report; weather >> full report

<< Cameron Hanover – Daily Energy Hedger – July 12, 2010 | Morning Petrospective – July 12, 2010 >>

Gas Petrospective – July 12, 2010

July 12 2010, 08:20

Gas Petrospective – July 12, 2010

Nymex

Natural gas prices were effectively unchanged on Friday, ending a second consecutive week of losses. August natural gas prices lost 28.5 cents last week, over four trading days, after losing 22.1 cents per million Btu over the course of the previous week. What was especially worthy of attention, though, last week, was the insistence of prices to decline despite two days of record-breaking hot temperatures in the greater New York metropolitan area.

That represents millions of homes, offices and apartments that were running air-conditioning around the clock, which in turn represented record electrical use, including the running of natural gas and diesel-fired peaking units or generators. Their use would have used up additional natural gas supplies, although production seems to have increased recently because of summertime demand (financial) and molecule expansion (physical). In any event, it seems that it is going to take extraordinary heat to eat into inventories, and output has never been more flexible, largely because of shale-gas production.

Prices were lower earlier in the session, but short-covering came in before the afternoon finish and it lifted prices to end the day near unchanged in the first two contract months. There was decent long liquidation near the day’s highs and short-covering near the lower prices, and few traders seem to have been initiating fresh positions. The shorts seem to have had the greater urgency and private forecasters were calling for warmer-than-normal temperatures in the Midwest and almost the entire East from Wednesday through next Sunday. And this week’s EIA underground storage figures should show the effects of last week’s record hot readings in the Northeast. At some point, we have to expect hotter weather to eat into the surplus against the five-year average. It has already turned a surplus against a year ago into a deficit, but cutting into a surplus of 287 bcf (vs five-year average) will be harder.

Volatility Term Structure