Daily Market Update
Update for Wednesday, Sept. 1, 2010:
October 2010 natural gas futures are up 4 cents at $3.85. Oct10 light sweet crude oil is down 88 cents to $73.82.
Bullish Factors
- Peak hurricane season
- Growing storage deficit
Bearish Factors
- Strong shale production
- Warm winter forecasts
|
Next-day Power Traded for 9/1/10 |
||
| Mass Hub $93.60 |
Cin Hub $47.82 |
NY Zone A $62.45 |
| PJM West Hub $73.77 |
ERCOT North $42.67 |
CA SP15 $38.72 |
Summary:
The Oct10 contract traded in a choppy fashion yesterday, trading in a 10-cent range but ended up closing the day flat at $3.816. The support in the market stems from the above-normal temps, as well as the increased hurricane activity. On the bearish side, we still see a fairly strong supply, coupled with expected higher storage injections as we move into September and October. Weather patterns are normal to above-normal in the 15-day forecast but it is important to note that above-normal temps in September are not typically as extreme as the heat like we saw in July and August.
Update for Tuesday, August 31, 2010:
October 2010 natural gas futures are up 4 cents at $3.85. Oct10 light sweet crude oil is down 88 cents to $73.82.
Bullish Factors
- Peak hurricane season
- Growing storage deficit
Bearish Factors
- Strong shale production
- Warm winter forecasts
|
Next-day Power Traded for 8/31/10 |
||
| Mass Hub $77.97 |
Cin Hub $54.49 |
NY Zone A $62.45 |
| PJM West Hub $71.53 |
ERCOT North $45.33 |
CA SP15 $32.49 |
Summary:
The October 2010 contract rallied for the first time in weeks, as it closed up 10.7 cents to finish the day at $3.812. During the recent downtrend, the prompt month had fallen from $4.923 to $3.651 in the span of one month. And, this happened right in the middle of the hottest summer on record. Because demand increases due to displacement of coal-fired generation at these levels, we wonder how much lower the market can go. But unless there is a major disruption of production from a hurricane, a sustained rally seems unlikely.
Update for Monday, August 30, 2010:
October 2010 natural gas futures are up 2 cents at $3.72. Oct10 light sweet crude oil is down 42 cents to $74.75.
Bullish Factors
- Peak hurricane season
- Growing storage deficit
Bearish Factors
- Strong shale production
- Warm winter forecasts
|
Next-day Power Traded for 8/30/10 |
||
| Mass Hub $78.01 |
Cin Hub $53.67 |
NY Zone A $60.00 |
| PJM West Hub $74.34 |
ERCOT North $45.14 |
CA SP15 $33.14 |
Summary:
The September 2010 contract expired on Friday, finishing down sharply 16.6 cents to $3.651. The pattern is similar to last year when the market hit bottom is early September. The key differences from last year are: we have a storage deficit, there is more storage available, and this hurricane season appears to be much more active. That being said, Calendars '11, '12 and '13 hit new all-time lows again and power prices for those terms are also at their all-time lows.
EIA Storage Report for 8-25-10:
The EIA reported a build into storage of 40 bcf. This was slightly above expectations and the market remains flat as it was prior to the report.
