Dropped

Continuing the recent string of small moves in either direction within the current trading range, July natural gas futures dropped 13.7 cents on Monday to close at $3.731. Moderating temperature forecasts and some signs of weakness from crude futures were seen as contributing factors to the drop. July crude shed another 35 cents to close Monday’s regular session at $68.09/bbl.

Influenced by a multi-dollar drop per barrel in crude oil futures, May natural gas futures dropped to a new low for the down move Monday before rebounding to close at $3.628, up 1.8 cents from Thursday’s pre-holiday close.

Following weeks of double-digit losses, the U.S. natural gas rig count only dropped two rigs for the week ending April 3 to a level of 808 rigs — a drop from a peak of 1,606 rigs on Sept. 12. However, several energy analysts think the decline was only a “pause,” and oilfield service providers will have to play nice with producers as service contracts are renegotiated.

Guided by financial and commodity market weakness and the lack of any supportive news, May natural gas futures on Tuesday dropped to a new low for the down move before closing out the regular session at $3.562, down 17 cents from Monday’s finish. The last time a front-month contract settled lower was more than six-and-a-half years ago on Sept. 25, 2002.

The U.S. Department of Energy (DOE) has dropped its opposition to natural gas development within a half-mile of the Project Rulison nuclear blast site in Colorado. However, Garfield County, CO, commissioners Monday voted to ask DOE to drill some test wells before any new energy development is allowed closer to the site.

Following weeks of double-digit losses, the U.S. natural gas rig count only dropped two rigs last week to a level of 808 rigs — a drop from a peak of 1,606 rigs on Sept. 12. However, several energy analysts think the decline was only a “pause,” and oilfield service providers will have to play nice with producers as service contracts are renegotiated.

The latest blast of winter cold in much of the East is proving to be short-lived, and so are the two days of price firmness that it caused. Numbers dropped at nearly all points Thursday as a warming trend was forecast for the Midwest and cold temperatures were due to ease slightly in the Northeast. While colder conditions would continue spreading in the South Friday, they weren’t enough to offset the decline of heating load in more northerly climes.

Heating load was still plentiful going into the weekend, but prices dropped across the board anyway Friday. The cash market was swayed mostly by the subpar storage pull that was reported Thursday and the accompanying screen weakness, along with the National Weather Service’s forecast of above-normal temperatures during the coming workweek in most of the East and as far into the Southwest as Arizona (see Daily GPI, Feb. 18).

Clearly showing the drop-off in demand and the increase in supply from new production, natural gas storage levels in the United States dropped only 195 Bcf for the week ended Jan. 30, which was one of the nation’s coldest weeks this winter. However, traders were actually expecting that only 190 Bcf would be removed for the week, so prices rebounded and ended up closing on the day at $4.642, up 4.5 cents from Wednesday’s regular session finish.