Gains

Gas prices overall averaged a penny lower Monday with declines in the Midcontinent and Gulf partially offset by gains at California and eastern points. Futures prices took a hit as weather forecasters called for moderating conditions. At the close of trading November had tumbled 12.5 cents to $3.486 and December had retreated 10.3 cents to $3.774. November crude oil was down a penny to $91.85/bbl.

Boosted by activity in the Marcellus Shale and Mississippian Lime, Range Resources Inc. said Thursday it has beaten its 3Q2012 forecast for natural gas and natural gas liquids (NGL) production, with output up 47% year/year (y/y) and 10% sequentially.

The cash market eased overall Monday an average of 3 cents, but if titanic gains at some Northeastern points are factored out, the change was closer to a decline of 6 cents. A major Northeast pipeline announced significant maintenance work and deliveries north into Boston were sharply reduced. Weakness was also noted at California, Gulf, and Rockies points. At the close of futures trading October had sagged 7.8 cents to $2.865 and November was down 6.8 cents to $3.015. October crude oil tumbled $2.38 to $96.62/bbl.

Physical gas for weekend and Monday delivery was mostly flat in Friday’s trading with modest gains posted in the Rockies and Midcontinent. However, the real story could be found in the northeast, where large drops were recoreded for a second straight trading day.

The power generation and transportation fuel sectors may see substantial gains in natural gas use, but California’s overall natural gas demand is expected to stay essentially flat in the next two decades, according to two recent companion gas reports released by the California Energy Commission (CEC).

The cash market overall gained on average about 3 cents Wednesday with Northeast points reporting stout gains, and increases at Midwest locations not far behind. The approval of a major pipeline project anticipated to expand deliveries into New York City by 4Q2013 ripped through the basis market and differentials narrowed considerably. Futures advanced and by the close June had advanced 3.0 cents to $2.737 and July had gained 2.0 cents to $2.796. July crude oil plunged below $90 and settled at $89.90, down $1.95/bbl.

The cash market on average was flat in Wednesday’s trading with gains registered at northeastern points and declines noted in Southern California. Futures made new highs for the recent advance before falling prey to a double-digit drubbing as longer-term weather forecasts called for moderate temperatures in key Midwest and eastern markets and news circulated that a veteran gas trader was closing his hedge fund. At the close of futures trading June had given up 11.8 cents to $2.253 and July had fallen 11.4 cents to $2.354. June crude oil skidded 94 cents to $105.22/bbl.

Williams management said Thursday it is primed for continued growth from the Marcellus Shale because producers want more natural gas takeaway capacity and stalwart Transcontinental Gas Pipe Line (Transco) is ready to deliver the goods.

Lower 48 gas production in January climbed 0.36 Bcf/d to a record 72.85 Bcf/d mostly on production gains in the “other states” category in the Energy Information Administration’s (EIA) Monthly Natural Gas Gross Production report. EIA said the other states contributed an increase of 0.38 Bcf/d, or 1.8%, partly due to continued drilling activity in the Marcellus Shale and Colorado. New Mexico output rose by 0.10 Bcf/d, or 2.8%. Louisiana posted the greatest production decrease at 0.16 Bcf/d, or minus 1.8%, as some operators reported curtailed production. In Texas production was flat compared with December’s level, which was revised to a 1.2% decline from November. Oklahoma’s January production fell by 0.6% from December. Production in the federal offshore Gulf of Mexico was flat with December. Wyoming was up 0.9%, and Alaska was up 3.4%.