Collapsing

Rapid warming of the Gulf of Mexico (GOM) and a collapsing El Nino pattern in the Pacific could create 16-18 named storms during the upcoming Atlantic hurricane season, which would make 2010 one of the most active seasons on record, according to AccuWeather.com Chief Long Range Forecaster Joe Bastardi.

February natural gas futures hit the ground running Monday following a weekend forecast for some extended cold throughout the eastern half of the United States. After gapping higher to open Monday’s trading well above psychological resistance at $7, the prompt month put in a high of $7.340 before settling at $7.319, up 43.3 cents from Friday’s close.

Even though December natural gas futures ran up to a new high for the move at $8.250 on the Energy Information Administration’s (EIA) natural gas storage report of a 7 Bcf withdrawal, the contract ended up collapsing back below the psychological $8 barrier for the fourth time in a little over a week, settling at $7.955, up 13.2 cents on the day.

With gas prices collapsing Friday to $4.40 at the Henry Hub and to $1.73 on Kern River in the Rockies and storage space severely limited, it may not be long before producers start shutting in wells. Analysts at Raymond James & Associates said Monday if last week’s storage report of a 108 Bcf injection during the week of Sept. 8 is accurate and represents a trend, “then U.S. producers would need to shut in about 10% of their production to rebalance the system over the next two months.”

Putting in a wild and volatile day of trading Wednesday, March natural gas futures ratcheted higher in the morning to put in a $9.820 high before collapsing lower. After notching a low of $8.700 late in the session, the prompt month settled at $8.723, down 59.3 cents on the day.

Don’t count on a multitude of new liquefied natural gas (LNG) import terminals and a flood of LNG collapsing domestic gas prices, said James Trifon, Wood Mackenzie’s managing consultant for North America LNG. Most of the import terminals planned won’t make it, and the underlying tight domestic supply situation will continue to support the market, he said in a preview of a presentation to be given at GasMart on March 18 in New Orleans (see http://www.gasmart.com/).

Don’t count on a multitude of new liquefied natural gas (LNG) import terminals and a flood of LNG collapsing domestic gas prices, said James Trifon, Wood Mackenzie’s managing consultant for North America LNG. Most of the import terminals planned won’t make it, and the underlying tight domestic supply situation will continue to support the market, he said in a preview of a presentation to be given at GasMart on March 18 in New Orleans (see http://www.gasmart.com/).