Natural Gas Storage

Natural Gas Rigs vs. NYMEX Prices

Natural Gas/Crude Oil Price Correlation

3-Month Temperature Outlook

EIA (Energy Information Administration) reported a net withdrawal of 192 Bcf (billion cubic feet) for the week ending January 13, 2011.

Inventories are at 3,098 Bcf, which is up 20.7% or 531 Bcf from last year and 547 above the 5-year average or 21.4%.

www.eia.doe.gov

Spot prices at most market locations fell early during the report week (Wednesday, January 18 to Wednesday, January 25), only to reverse the trend on Monday and end the report week up. The Henry Hub spot price increased 12 cents over the week, from $2.49 per MMBtu last Wednesday to $2.61 per MMBtu yesterday. The New York Mercantile Exchange followed a similar pattern, with the near-month contract (February) increasing 25.7 cents, from $2.472 per MMBtu last Wednesday to $2.729 yesterday. Working natural gas in storage fell last week to 3,098 billion cubic feet (Bcf) as of Friday, January 20, according to the U.S. Energy Information Administration’s (EIA) Weekly Natural Gas Storage Report (WNGSR). The implied net withdrawal for the week was 192 Bcf, positioning storage volumes 531 Bcf above year-ago levels.The natural gas rotary rig count, as reported by Baker Hughes Incorporated on January 20, fell by 11 to 780. The count for oil-directed rigs increased by 32 to 1,223. While the gas rig count is 14 percent lower than this week last year, the oil rig count is up by 53 percent.

www.eia.gov

www.bloomberg.com

12/24-Month Strip (NYMEX) Price

12 Month Strip                        24 Month Strip

$3.014 MMBtu                        $3.353 MMBtu

Crude Ends At $99.70; IEA Assures On Supply

Crude oil futures settled little changed and below $100 a barrel after the West’s energy watchdog reiterated that it doesn’t see any disruption in oil supplies now, but could tap emergency stockpiles if needed.

The comments, from the head of the International Energy Agency, came after oil prices had climbed 2% earlier after Iran said it was considering an immediate halt to crude oil exports to the European Union. That move, Iran said, would be in response to the EU trade embargo set to take effect July 1. Iran sells about 600,000 barrels a day of crude to EU nations.

An Iranian lawmaker said the parliament will consider the cutoff at a meeting on Sunday. Such a move would send European oil buyers scrambling for replacement supplies, closing the six-month window the EU built into its embargo plan agreed upon earlier this week. The EU set the embargo to ratchet up pressure on Tehran to halt its nuclear program. But Iranian lawmakers want an abrupt halt of the exports–accounting for 5.8% of EU needs in 2010–in order to push prices higher and hurt European economies.

Maria van der Hoeven, IEA executive director, said there isn’t a need for an emergency oil release now, but the agency continues to monitor the oil markets in light of mounting tensions over Iran.

“Emergency stocks are there, but they can only be used if there is a real, very serious disruption of supplies,” van der Hoeven said Thursday. “And at this moment, this is not the case.” She repeated the IEA view that global oil markets remain tight despite concerns about slowing economic growth. Analysts said that makes the market ripe for a spike on any break in the normal supply chain.

“Any time you start taking any oil off the market, there’s upward pressure on prices. The market will react instantaneously and then wait to see if the gap is filled,” said Tom Bentz, a director of BNP Paribas Prime Brokerage.

Light, sweet crude oil for March delivery on the New York Mercantile Exchange settled up 30 cents at $99.70 a barrel, a one-week high. The contract rose 2% intraday to a high of $101.39 a barrel, and fell late in the session to a low of $99.23 a barrel.

ICE Brent crude for March settled 98 cents higher, at $110.79 a barrel. That was the biggest rise since Jan. 4.

“Iran likes to talk a lot, but whether they will follow through remains questionable,” said Gene McGillian, analyst at Tradition Energy. “For now, the market seems to have found an area around $100 a barrel that it wants to float around.”

“It’s a scary situation right now,” said Bentz, adding that tensions over Iran add about $5-$10 a barrel to current prices. In response to U.S.-led efforts to tighten sanctions, Iran has at times threatened to close the Strait of Hormuz, the vital shipping outlet for about 20% of the world’s oil.

Ali Naimi, Saudi Arabia’s oil minister, said recently that the kingdom’s oil output could be quickly increased to around 11.8 million barrels a day, while it would take about 90 days to bring production to capacity of 12.5 million barrels a day. The Saudis said they pump 10 million barrels a day in November, and the IEA estimated the December flow at 9.85 million barrels a day.

Meantime, U.S. oil data shows the level of demand than can be met by stockpiles continued to top five-year average levels. But the cushion is the smallest in two months.

Traders said the market, which is still seeking clear signals of a sustained economy recovery, got another mixed picture Thursday.

Jobless claims rose by 21,000 last week, slightly below the expected increase of 23,000. December orders for durable goods rose for a third straight month, with the 3% rise topping economists’ forecasts for a 2% gain. But new-home sales decreased by 2.2% in December after three monthly rises. Economists’ forecasts had called for a 1.9% rise.

February heating oil futures settled 3.43 cents higher, at $3.0535 a gallon. The rise was the biggest since Jan. 4 and put prices at the highest level since Jan. 12.

Oil Rigs: 1,228     |    Gas Rigs:   780

Previous Week:

Oil Rigs:  1,196    |    Gas Rigs:   791

Last Year:

Oil Rigs:   807    |    Gas Rigs:  906

www.bakerhughes.com

North: $0.03539

Houston: $0.03523

South: $0.03514

West: $0.03107

Reg Down: $0.00542

Reg Up:  $0.00822

RRS:  $0.00833

NYISO

NYC LBMP: $0.031155

PJM

AEP GEN HUB LMP: $0.02883

ISO NE

Mass. Boston Day Ahead LMP: $0.030265

MISO

Illinois Hub Hourly LMP: $0.02338

* A mix of precipitation types is expected overnight for eastern and northern New York and much of New England

* Winds should be on the increase across the region overnight as low pressure begins to move through the region

* Milder than average temperatures are expected across the region, ranging from the teens in northern Maine to the 60s in southern West Virginia

South:

* Rain and thunderstorms will spread from the Lower Mississippi Valley across the Southeast by tonight

* Winds should be on the increase in the Southeast as low pressure moves through the region

* Warmer than average temperatures are expected in the Southeast and much of Oklahoma

* Highs will range from around 50 in northern Arkansas and western Virginia to the 80s on the Florida Peninsula

Mid West:

* A mix of precipitation types, changing to a mix of rain and snow, is expected from northeastern Ohio to northern Indiana

* Some snow showers are possible in the Upper Mississippi Valley and western Great Lakes today

* Snow showers should spread into the Northern and parts of the Central Plains overnight tonight

* Mild temperatures for January are expected across the region today, with highs ranging from around 30 in northern Minnesota to the 50s in the Central Plains

West:

* Rain and mountain snow from the Pacific Northwest and Northern Rockies will spread into Northern California, the Northern High Plains, and the Great Basin by tonight

* Avalanche danger remains high in the Uinta Mountains of Utah

* Mild temperatures are expected across the region

* Highs will range from the teens in the higher elevations of the Cascades to the 80s in Southern California and southwestern Arizona

www.weather.com

An abundance of shale gas plays (see above image) has led to a surplus in natural gas inventories. Coupled with the mild winter the US has seen, natural gas prices steadily declined. After Chesapeake’s announcement, the market closed up $0.182 to $2.525. Pundits still feel that to have a real impact, other producers such as Exxon, EnCana and Devon Energy will have to follow suit.

Please visit http://rapidpower.net/rpm-market-news to see a real time update on 12, 24 and 36 month natural gas futures prices.

Natural Gas Storage

Natural Gas Rigs vs. NYMEX Prices

Natural Gas/Crude Oil Price Correlation

3-Month Temperature Outlook

Inventories are at 3,290 Bcf, which is up 19.6% or 539 Bcf from last year and 566 above the 5-year average or 20.8%.

www.eia.doe.gov

With few exceptions, natural gas prices dropped substantially at most market locations. The Henry Hub price continued declines from last week, falling 32 cents over the week to end yesterday at $2.49 per MMBtu. Most other pricing points that posted declines fell by similar amounts, in the 20 to 30 cents range. A relatively warm winter so far, as well as higher-than-average storage levels, has put downward pressure on natural gas prices this year.

At the NYMEX, prices dropped to lows not seen in almost 10 years. The near-month (February 2012) futures contract fell from $2.774 per MMBtu last Wednesday to $2.472 yesterday. The 12-month strip, the average of the 12 contracts between February 2012 and January 2013, declined from $3.114 per MMBtu last Wednesday to $2.848 per MMBtu yesterday.

Working natural gas in storage fell to 3,290 Bcf as of Friday, January 13, according to EIA’s WNGSR. This represents an implied net withdrawal of 87 Bcf. Stocks were 566 Bcf higher than the 5-year average level, as well as 539 Bcf higher than last year at this time. Inventories in the Producing Region stand out at 276 Bcf (31.1 percent) above the 5-year average of 888 Bcf. Stocks in the East and West Regions were above their 5-year averages by 224 Bcf (15.2 percent) and 66 Bcf (18.0 percent), respectively.

The implied net withdrawal was 46% lower than the 5-year average withdrawal for the week, likely due to warmer-than-normal weather. In all three regions, the net withdrawals for the week were significantly lower than the 5-year average. The implied net withdrawal of 15 Bcf in the Producing region was 70% lower than the 5-year average. Implied net withdrawals in the East and West Regions were 33% and 48% lower than the 5-year average, respectively.

Temperatures during the week ending January 12 were 9.1 degrees warmer than the 30-year normal temperature and 13.1 degrees warmer than the same period last year. At the national level, the average temperature was higher than the 30-year average by a greater margin than the last 9 weeks of warmer-than-normal temperatures. During the week all regions were warmer than normal, particularly the West North Central and East North Central regions in the Midwest averaging 13.7 and 13.6 degrees warmer than normal, respectively. Heating degree-days nationwide were down 28.8 percent from normal.

www.eia.gov

www.bloomberg.com

12/24-Month Strip (NYMEX) Price

12 Month Strip                        24 Month Strip

$2.73 MMBtu                          $3.09 MMBtu

Crude Edges Lower After US Oil Data

Crude oil futures eased Thursday, settling modestly above $100 a barrel after U.S. data showed oil demand in the last four weeks fell to a 15-year low.

Prices had topped $102 early in the session, spurred by news that U.S. weekly jobless claims fell to the lowest level since April 2008.

Those gains were shattered by data from the Energy Information Administration that showed oil use in the world’s biggest oil consumer slumped 7.2% from a year earlier in the last four weeks, and was the weakest since April 1997.

Demand for gasoline, the most widely used petroleum product, fell to an 11-year low below 8 million barrels a day in the week ended Jan. 13, the EIA said. U.S. output of gasoline exceeded demand by a record 9.5% in the week, leading to bigger-than-expected rise in inventories. Gasoline stocks are sufficient to cover 28.5 days, a 13-year high, the EIA data show.

“The gasoline side doesn’t look good at all,” said Gene McGillian, analyst and broker at Tradition Energy in Stamford, Conn. “But we are seeing signs of some kinds of positive aspects for the market,” he said, noting the jobless claims report.

Light, sweet crude oil for February delivery settled 20 cents lower, at $100.39 a barrel on the New York Mercantile Exchange. The February contract, which expires at Friday’s settlement, traded to a session high of $102.06 a barrel for the second straight day. March crude settled 22 cents lower, at $100.54 a barrel.

North Sea Brent crude oil on the ICE futures exchange settled 89 cents higher, at $111.55 a barrel.

Reformulated gasoline blendstock futures for February settled 0.96 cent lower, at $2.8158 a gallon, while February heating oil rose 2.26 cents, to $3.036 a gallon.

www.rigzone.com