Falling

Growing natural gas supply, combined with weak demand, is sustaining gas-price weakness, which may in turn lead to increased pressure on exploration and production (E&P) shares, according to energy analysts, who warned this week that without a major event before the next heating season — such as a hurricane in the Gulf of Mexico — natural gas prices will remain low for several months.

There was still plenty of heat to go around, but expectations of another bearish storage report and further dismissal of a tropical wave threat to the Gulf of Mexico led most points to range from essentially flat to about 15 cents lower Wednesday. The lion’s share of declines were less than a dime, and several Rockies pipes achieved double-digit increases.

Exxon Mobil Corp. and Chevron Corp., the number one and two energy companies in the world, both posted record profits in their second quarter earnings, but analysts warned that going forward, it will be difficult for the energy companies to continue soaring if oil and natural gas prices remain depressed. Exxon, the largest publicly traded company, saw earnings up 5.5% in both natural gas and refining operations, while Chevron’s jumped 21%.

As expected, prices were falling virtually across the board Thursday as the screen turned in another negative performance and air conditioning load remained unseasonably light outside the western portion of the Southeast and in the Midcontinent and desert Southwest.

Prices were falling almost across the board Tuesday in both late-June swing deals and in bidweek trading. The screen was an obvious negative influence, but of greater impact was a growing feeling that prospects are dim for the market to pull out of its tailspin anytime soon.

Discounting reports from other Wall Street analysts about permanent gas “demand destruction” and rapid supply growth being the causes of the current price collapse, Robert Christensen of First Albany Corp. said prices have fallen mainly in reaction to strong storage injections this spring and probably will rebound because of minimal supply growth. Christensen released a report last week titled “Still a `No Show’- Natural Gas Supply Growth” that makes a case for remaining bullish in the face of rapidly declining spot prices.

Discounting reports from other Wall Street analysts about permanent gas “demand destruction” and rapid supply growth being the causes of the current price collapse, Robert Christensen of First Albany Corp. said prices have fallen mainly in reaction to strong storage injections this spring and probably will rebound because of minimal supply growth. Christensen released a report this week titled “Still a ‘No Show’ – Natural Gas Supply Growth” that makes a case for remaining bullish in the face of rapidly declining spot prices.

Prices continued to fall almost across the board Friday, which was hardly surprising because a pattern of weak weather fundamentals remained in place, June futures dropped more than a nickel in their prompt-month debut, and gas demand typically goes down over a weekend period.

Not surprisingly, the cash market was still falling going into the weekend. Generally Friday’s losses were mild at a dime or less, though, and few points fell much more than a dime other than San Juan Basin, Malin and the California border into PG&E.