Market Update Video
Stay up-to-date on all the latest market trends and analysis, including natural gas and electricity pricing, rig counts, natural gas storage, bullish and bearish market factors and buying strategies in our weekly market update broadcast with Hans Rottmann, Manager of Market Intelligence. View Now »
For monthly summaries, check out Hans' Buying Strategies market summary.
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DAILY MARKET UPDATES
Market Update for Feb. 3 2012
Mar '12 natural gas futures are down 8 cents to $2.46. Mar '12 light sweet crude oil is down 32 cents to $96.04.Market Factors:
Bullish Factors
- Coal-to-gas switching
- EPA regulations
- Potential production cutbacks
- Potential Marcellus Shale impact overestimated
- Bearish Factors
- Strong storage builds
- Warm weatherNext-day Power Traded for 2/3/12
Mass Hub
$32.88Cin Hub
$29.31NY Zone A
$32.00PJM
West Hub
$32.31ERCOT
North
$21.29CA
SP15
$29.11Summary for 2-3-12
The prompt contract traded up $0.172, closing at $2.554. The EIA reported a withdrawal from storage of 132 Bcf, which was above the consensus of 123 Bcf and which caused the market to rally. The report was still bearish year-over-year and versus the 5-year average. Storage is now at a surplus of 25% versus last year and versus the 5-year average. There was also some technical trading likely taking place as the prompt month neared the $2.30 mark (which we hit last month) and 10-year lows. Weather remains bearish through February.
No. 2 U.S. Natural Gas Producer Announces Cutbacks to Production
The daily market update has been consistently bearish with little indication that natural gas prices will stabilize and stop their downward push to $2.00 anytime soon. However, this morning Chesapeake Energy, the #2 U.S. producer of natural gas, announced significant cutbacks to drilling and production due to low prices. Please click below for more information. Generally, large producers such as Chesapeake are better equipped to produce in such low-price environments and wait for low to mid-range suppliers to exit the market. The fact they are changing their production decisions significantly signals that margins are razor-thin for even them. Consequently, this race to the bottom may not transpire and the market may start to push upward after these production decisions start to impact the market. If customers are looking for a sign of a market bottom, this could be it, although it will likely require action by others producers as well.
EIA Storage Report: 2-2-12
The EIA reported a draw from storage of 132 Bcf, which was on the high side of expectations.
Storage now stands at 2.966 Tcf
Last year: 2.380 Tcf
5-year average: 2.365 Tcf
With the forecasted mild weather, the storage surplus is expected to expand to ~800 Bcf over the next few weeks.
