Downward

Without any bullish weather even on the horizon, February natural gas picked up the downward trend from the previous week, venturing as low as $9.150 on Monday before closing at $9.360, down 27.2 cents on the day.

With natural gas futures prices continuing their downward spiral, the New York Mercantile Exchange Inc. (Nymex) said Thursday that some of the margins on natural gas futures, Henry Hub swap futures, Henry Hub penultimate swap futures, Nymex miNY natural gas futures, and Henry Hub swing swap futures contracts will decrease at the close of business Friday.

The Energy Information Administration (EIA) in November has revised downward its projection on rising winter heating costs. Bills for households fueled by natural gas are now expected to rise 41% ($306 more per household) rather than the 48% hike ($350 more per household) EIA predicted in October.

Continuing to ride the downward futures momentum from Thursday, cash points cratered another 15-65 cents on Friday, leaving Henry Hub cash about flat to the screen as of the end of the cash trading session. The vast majority of points were down 20-40 cents. However, natural gas futures then proceeded to follow crude oil higher, ending the day up 18.3 cents to $9.111.

Royal Dutch Shell Group’s downward revisions to its proved oil and natural gas reserves has cost the producer its top credit rating from Standard & Poor’s Ratings Services (S&P). S&P estimated that proven reserves amounted to “only 12 billion boe,” or about eight-and-a-half years of production at Dec. 31, 2004, “a level significantly below that of most oil companies globally.”

Continuing the downward trend, December natural gas futures fell 24.5 cents Friday to settle below the $8 mark at $7.954. For the week, the prompt month fell 77.1 cents from the previous Friday’s $8.725 close.

Continuing the downward trend, December natural gas futures fell 24.5 cents Friday to settle below the $8 mark at $7.954. For the week, the prompt month fell 77.1 cents from the previous Friday’s $8.725 close.

Continuing to put downward pressure on the natural gas futures market, the Energy Information Administration (EIA) reported that a whopping 99 Bcf of gas was injected into underground storage for the week ended Sept. 10. The bearish report along with expectations that Gulf production will be back online soon allowed the prompt month to drop 10.5 cents to settle at $4.719.

Multiple bearish factors seemed to converge on Thursday and Friday to keep downward pressure on the natural gas cash market. As Gulf production resumed after Tropical Storm Bonnie and Hurricane Charley made landfall, traders were faced with below normal temperatures, cooling rains from the storms and a continuation of higher than expected storage injections. That last item could be the one that has the most lasting impact, according to Thomas Driscoll of Lehman Brothers.