Gains

Robust gains in March underpin a significant upward revision in the Energy Information Administration (EIA) 2011 natural gas production forecast, the agency said last week. Production this year is expected to increase by 4.5% (to 64.6 Bcf/d), up from the 2.3% (to 63.2 Bcf/d) forecast a month ago in the agency’s previous Short-Term Energy Outlook (see NGI, May 16).

Robust gains in March underpin a significant upward revision in the Energy Information Administration (EIA) 2011 production forecast, the agency said Tuesday. Production this year is expected to increase by 4.5% (to 64.6 Bcf/d), up from the 2.3% (to 63.2 Bcf/d) forecast a month ago in the agency’s previous Short-Term Energy Outlook (see Daily GPI, May 11).

Tuesday’s smaller price gains than those a day earlier proved indicative of the market direction, as most points saw small losses Wednesday. Forecasts of modest retreats in peak temperatures in the South, and to a lesser extent in the Northeast, tended to squelch some of the extra cooling load from earlier in the week, and Tuesday’s 0.1-cent decline by June futures was neutral regarding cash market guidance.

Natural gas could take as much as two-thirds of the market for new power generation over the next 20 years, including load gains from the retirement of more than 50 GW of coal-fired power generation capacity, according to the 1Q2011 Integrated Energy Outlook produced by research and consulting firm ICF International.

The recently bullish cash market carried over into Monday, with price gains across the board supported by pockets of weather-related demand and the previous Friday’s rise of 12.7 cents by June futures.

Spot prices saved their best for last — at least in the viewpoint of bullish traders — by making the strongest gains of last week virtually across the board on Friday. A large futures uptick a day earlier combined with increasing weather-based load in some areas to support the physical market.

It was no mirage that the smaller gains and growth of larger losses in Wednesday’s pricing signaled weakening of this week’s rebound (see Daily GPI, April 14). Only a few scattered instances of flat numbers were left out of an overall downturn in the spot market Thursday. The chillier weather that had sparked a rally at most points from Monday through Wednesday had faded enough to lose its price-boosting ability, and the southern third of the U.S. is not yet hot enough to create compensating power generation demand.

The Lower 48 states showed natural gas production gains of 9% from December 2009 to December 2010, led by a major jump in Louisiana production and in shale gas production in areas outside the traditional large producing states, the Energy Information Administration (EIA) said last week.

The Lower 48 states showed natural gas production gains of 9% from December 2009 to December 2010, led by a major jump in Louisiana production and in shale gas production in areas outside the traditional large producing states, the Energy Information Administration (EIA) said Monday.