Gas Petrospective – August 9, 2010
Natural gas prices dropped another 13.1 cents per million Btu on Friday. Friday’s biggest bearish factor was the addition of another 11 gas rigs, bringing the total to 983 active rigs (Baker-Hughes). We also believe that managed money accounts, which had been buying and covering shorts through Tuesday, were actively selling natural gas contracts from the middle of the week through the end.
Supplies are on the ample side, but they have been steadily falling against the five-year average. For the week ended June 4th, the amount of gas in storage was 310 bcf (14.45%) higher than the five-year average and was 28 bcf (1.15%) higher than a year ago. Two weeks ago, the surplus against the five-year average was 261 bcf (9.92%) while year-on-year, stocks were 33 bcf (1.77%) below year-ago levels. Now, there is a surplus of 221 bcf (8.10%) against the five-year average and storage is 132 bcf (4.29%) lower than a year ago.
Temperatures have been consistently warmer than normal recently, and forecasts suggest that this is a trend that is likely to persist, at least into the middle of August. And we do still have the heart of tropical storm season in front of us, with Colorado State sticking to its guns while the NOAA sees less of an upside in the number of named storms. Nevertheless, both believe we have about 10-16 named storms coming.
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