Falling

In the unconventional gas resource era, falling rig counts no longer mean declining production, and the traditional rig count no longer tells the tale of where the industry and the market are going, according to Bentek Energy LLC.

Prices continued to fall by greater amounts Monday than they had entering the weekend, with forecasts of low temperatures in much of the East falling short of what was expected and the previous Friday’s 15-cent drop by November futures being an extra depressant on cash numbers. The return of industrial load from its usual weekend hiatus apparently had no impact on the physical market.

The cash market was close to evenly divided on rising and falling numbers Monday, with a majority of points straying no further than about a nickel in either direction from unchanged.

To no one’s surprise, prices kept falling at most points Monday as weather-based demand remained weak and the previous Friday’s 17.3-cent drop by October futures in their prompt-month debut continued to put negative pressure on the cash market. However, the restoration of industrial load from its usual weekend decline, along with heat in some areas, allowed quite a few scattered points to be flat to nearly C25 cents higher.

After dipping to a new low for the move at $3.049 repeatedly in overnight Globex trade, September natural gas futures rebounded a bit during Wednesday’s regular session. Falling just short of sub-$3 prices for the first time since the same week of 2002, the prompt-month contract ended up closing the day’s session at $3.119, up 2.3 cents from Tuesday’s close.

Light weather-based demand kept cash prices falling at nearly all points Friday as forecasts of slightly higher heat levels in the South and Midcontinent were offset by a continuation of moderate-to-cool springtime conditions in most other regions. The weekend decline of industrial load was another bearish factor, while as expected, the previous day’s 4.4-cent gain by July futures had essentially no impact on the physical market.

When economists at the Energy Information Administration (EIA) early this year pondered what might put a floor under falling natural gas prices, their first thought was supply curtailments. But attention soon turned to the demand side and the growing economic advantage of gas-fired generation relative to coal-fired plants.

Despite modestly supportive prior-day futures, the cash market acknowledged the general bearishness of weather fundamentals in falling at nearly all points Tuesday. The remote threat Monday of an early-season tropical disturbance in the Gulf of Mexico had pretty much disappeared a day later.

When economists at the Energy Information Administration (EIA) early this year pondered what might put a floor under falling natural gas prices, their first thought was supply curtailments. But attention soon turned to the demand side and the growing economic advantage of gas-fired generation relative to coal-fired plants.